Special District for Foreign Trainees and Policy Evaluation (Japanese)

This paper focuses on kenshusei tokku or the special district for foreign trainees—a type of Special District for Structural Reform designated as subject to special rules regarding the acceptance of foreign trainees—and examines the impact on firms taking advantage of such rules as well as on the local labor market. In kenshusei tokku , the first of which was established in 2003, qualified firms with less than 50 employees are allowed to accept up to six foreign trainees, twice as many as under the regular rules. By matching micro-level data from the Census of Manufactures from 1999 to 2007 with the list of qualified firms, we can clarify characteristics of such firms as compared to non-qualified firms within the special districts and firms in other areas. It has been found that the average rate of non-regular workers for qualified firms has decreased, contrary to the general trend of increasing dependence on non-regular workers, after their district was designated as kenshusei tokku . This result suggests that there is some degree of substitution between foreign trainees and Japanese non-regular workers.