Japanese Lifetime Employment: A Century's Perspective
AbstractThis paper examines the origins and dynamic evolution of the lifetime employment system in Japan from the beginning of the 20th century to present. Based on the historical perspective developed in the paper, we derive implications to the future course of the Japanese employment system. In this paper, we view lifetime employment as an economic as well as social institution, characterized by an implicit contract and reciprocal exchange of trust, goodwill, and commitment between employers and workers. We argue that this institution emerged as an equilibrium outcome of the dynamic interactions among management, labor, and government and became an integral part of the nation's employment system over the past hundred years, reinforced by complementary institutions such as state welfare policies, labor laws, corporate governance, social norms, family values, and education system. Based on our long-run historical analysis, we reevaluate the cost and benefit both in terms of economic and social of the lifetime employment system and explore the factors that determine its efficiency and stability. We emphasize the importance of understanding labor market conditions, technology and the nature of human capital, interactions between social and economic aspects of employment relations, and the role of complementary institutions. The paper concludes by assessing changes in these factors in the post-bubble period, offering some insights to the future course of the Japanese employment system.
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Bibliographic InfoPaper provided by The European Institute of Japanese Studies in its series EIJS Working Paper Series with number 205.
Length: 35 pages
Date of creation: 01 Sep 2004
Date of revision:
Publication status: Published in Institutional Change in Japan, Blomstrom, Magnus, La Croix, Sumner (eds.), 2006, pages 152-176, Routledge.
Contact details of provider:
Postal: The European Institute of Japanese Studies, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden
Web page: http://www.hhs.se/eijs/
More information through EDIRC
Japan; institutional change; lifetime employment; implicit contract; labor laws; social norms; war; zaibatsu; state welfare policies; division of labor; gender; demand-side shocks; supply-side shocks.;
Find related papers by JEL classification:
- J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
- N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East
- P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism
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