Changes in the Japanese Employment System in the Two Lost Decades
AbstractDespite changes in the economic and social environment following the burst of the bubble economy in the early 1990s, studies on the Japanese employment system so far have detected few major changes in seniority-based wage or lifetime employment patterns. Using recent microdata from the Basic Survey on Wage Structure, this paper takes another look at developments in these two key elements of the Japanese employment system. In contrast with previous studies, we do find evidence that the two practices are eroding and that, hence, the traditional employment system overall has begun to unravel. Specifically, with regard to seniority wages, we found, for example, that the age-wage profile has become flatter in recent years, especially for employees in the middle and final phase of their career. And as for lifetime employment, we found a clear downward trend in the share of lifetime employees among younger, university-educated workers from the early 2000s. Taken together, the findings suggest that a growing share of educated younger workers choose to leave indefinite-contract jobs due to the poor prospects for seniority-based wage progression, while older workers choose to stay in their present job despite stagnating or falling wages, since it is more difficult for them to find alternative employment.
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Bibliographic InfoPaper provided by Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University in its series PIE/CIS Discussion Paper with number 511.
Length: 35 p.
Date of creation: Mar 2011
Date of revision:
Seniority-based wages; Lifetime employment; Japan;
Other versions of this item:
- Junya Hamaaki & Masahiro Hori & Saeko Maeda & Keiko Murata, 2012. "Changes in the Japanese Employment System in the Two Lost Decades," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 65(4), pages 810-846, October.
- J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
This paper has been announced in the following NEP Reports:
- NEP-AGE-2011-05-24 (Economics of Ageing)
- NEP-ALL-2011-05-24 (All new papers)
- NEP-LAB-2011-05-24 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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