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The Productivity Effects of Human Resource Management Practices: Evidence from New Japanese Panel Data

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  • Takao Kato
  • Motohiro Morishima

Abstract

This paper uses new Japanese panel data to estimate the impact of various human resource management practices (HRMP's) on productivity efficiency. These include information sharing devices, such as joint labor-management committees (JLMC's) and non-union employee associations (NUEA's), and financial participation schemes, such as profit sharing plans (PSP's) and employee stock ownership plans (ESOP's). By merging data from a new survey concerning HRMP's among publicly-held Japanese firms with two other public data resources, we create for the first time a enterprise-level panel data set for Japanese firms that provides information annually for 1970-85 on both information sharing and financial participation. The data are then used to estimate translog production functions augmented by variables to capture the effects of information sharing and financial participation. The estimations yield the first econometric evidence on the productivity effects of diverse HRMP's in Japan. The key findings include: (i) there are significant productivity-enhancing effects for JLMC's, NUEA's, PSP's and ESOP's; (ii) these productivity gains will change as HRMP's age. For instance, the introduction of a JLMC boosts productivity initially by 9 percent annually. The productivity gains rise over time and reach their highest point (11 percent) 23 years after the introduction of the JLMC. After their highest point, the productivity gains gradually diminish and eventually call for the implementation of a new innovation in information sharing; (iii) there is a significant complementarity between information sharing and PSP's; and (iv) the favorable productivity effects of information sharing are reinforced by the presence of formal trade unions, pointing to a complementarity between information sharing and unions.

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Bibliographic Info

Paper provided by Levy Economics Institute in its series Economics Working Paper Archive with number wp_143.

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Date of creation: Jun 1995
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Handle: RePEc:lev:wrkpap:wp_143

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Web page: http://www.levyinstitute.org

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  1. FitzRoy, Felix R & Kraft, Korenelius, 1987. "Cooperation, Productivity, and Profit Sharing," The Quarterly Journal of Economics, MIT Press, vol. 102(1), pages 23-35, February.
  2. Richard B. Freeman & Martin L. Weitzman, 1986. "Bonuses and Employment in Japan," NBER Working Papers 1878, National Bureau of Economic Research, Inc.
  3. Tracy, Joseph S, 1986. "An Investigation into the Determinants of U.S. Strike Activity," American Economic Review, American Economic Association, vol. 76(3), pages 423-36, June.
  4. Wadhwani, S. & Wall, M., 1988. "The Effects Of Profit-Sharing On Employment, Wages, Stock Returns And Productivity: Evidence From Uk Micro-Data," Papers 311, London School of Economics - Centre for Labour Economics.
  5. Brunello, G., 1989. "Bonuses, Wages And Performance In Japan: Evidence From Micro Data," Papers 359, London School of Economics - Centre for Labour Economics.
  6. Casey Ichniowski & Kathryn Shaw & Giovanna Prennushi, 1995. "The Effects of Human Resource Management Practices on Productivity," NBER Working Papers 5333, National Bureau of Economic Research, Inc.
  7. Kumbhakar, Subal C. & Dunbar, Amy E., 1993. "The elusive ESOP--productivity link : evidence from U.S. firm-level data," Journal of Public Economics, Elsevier, vol. 52(2), pages 273-283, September.
  8. Masanori Hashimoto, 1990. "The Japanese Labor Market in a Comparative Perspective with the United States," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number jlm.
  9. Ben-Ner, A. & Jones, D., 1992. "An New Conceptual Framework for the Analysis of the Impact of Employees Participation, Profit Sharing and Ownership on Firm Performance," Papers 92-10, Minnesota - Industrial Relations Center.
  10. Freeman, Richard B, 1976. "Individual Mobility and Union Voice in the Labor Market," American Economic Review, American Economic Association, vol. 66(2), pages 361-68, May.
  11. Derek C. Jones & Jeffrey Pliskin, 1988. "The Effects of Worker Participation, Employee Ownership and Profit Sharing on Economics Performance: A Partial Review," Economics Working Paper Archive wp_13, Levy Economics Institute.
  12. Jones, Derek C & Kato, Takao, 1995. "The Productivity Effects of Employee Stock-Ownership Plans and Bonuses: Evidence from Japanese Panel Data," American Economic Review, American Economic Association, vol. 85(3), pages 391-414, June.
  13. Kruse, Douglas L, 1992. "Profit Sharing and Productivity: Microeconomic Evidence from the United States," Economic Journal, Royal Economic Society, vol. 102(410), pages 24-36, January.
  14. Nakamura, Masao & Nakamura, Alice, 1991. "Risk behavior and the determinants of bonus versus regular pay in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 5(2), pages 140-159, June.
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