IDEAS home Printed from https://ideas.repec.org/a/cup/jechis/v63y2003i03p625-665_54.html
   My bibliography  Save this article

Implicit Contracts, the Great Depression, and Institutional Change: A Comparative Analysis of U.S. and Japanese Employment Relations, 1920 1940

Author

Listed:
  • MORIGUCHI, CHIAKI

Abstract

This paper employs a game-theoretic framework and a comparative historical analysis to study the impact of the Great Depression on corporate welfarism,' i.e., employers' voluntary provisions of non-wage benefits, greater employment security, and employee representation to their blue-collar workers. By characterizing corporate welfarism as an implicit contract equilibrium, the paper documents parallel institutional developments in the U.S. and Japan towards corporate welfarism during the 1920s and identifies the early 1930s as a bifurcation point at which the two trajectories began to diverge toward two distinctive equilibria. In the U.S., the repudiation of the implicit contracts by most leading firms induced by a deep depression caused a change in the expectations of workers and the public, which, in turn, supported a legal reform and the adoption of explicit employment contracts based on industrial unions and third-party enforcement. Experiencing a less severe depression, most major employers in Japan maintained their implicit contracts, while developing institutional arrangements to mitigate the cost of long-term commitment. In contrast to the U.S., labor laws in Japan developed complementary to private welfare practices, endorsing corporate welfarism based on implicit contracts and internal enforcement mechanisms.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Moriguchi, Chiaki, 2003. "Implicit Contracts, the Great Depression, and Institutional Change: A Comparative Analysis of U.S. and Japanese Employment Relations, 1920 1940," The Journal of Economic History, Cambridge University Press, vol. 63(03), pages 625-665, September.
  • Handle: RePEc:cup:jechis:v:63:y:2003:i:03:p:625-665_54
    as

    Download full text from publisher

    File URL: http://journals.cambridge.org/abstract_S0022050703541948
    File Function: link to article abstract page
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fishback, Price V, 1992. "The Economics of Company Housing: Historical Perspectives from the Coal Fields," Journal of Law, Economics, and Organization, Oxford University Press, vol. 8(2), pages 346-365, April.
    2. Kanemoto, Yoshitsugu & Bentley MacLeod, W., 1989. "Optimal labor contracts with non-contractible human capital," Journal of the Japanese and International Economies, Elsevier, vol. 3(4), pages 385-402, December.
    3. Greif, Avner, 1993. "Contract Enforceability and Economic Institutions in Early Trade: the Maghribi Traders' Coalition," American Economic Review, American Economic Association, vol. 83(3), pages 525-548, June.
    4. George Baker & Robert Gibbons & Kevin J. Murphy, 1994. "Subjective Performance Measures in Optimal Incentive Contracts," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 1125-1156.
    5. Lazear, Edward P, 1979. "Why Is There Mandatory Retirement?," Journal of Political Economy, University of Chicago Press, vol. 87(6), pages 1261-1284, December.
    6. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-444, June.
    7. Price V. Fishback & Shawn Everett Kantor, 1995. "Did Workers Pay for the Passage of Workers' Compensation Laws?," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 713-742.
    8. Canice Prendergast, 1993. "The Role of Promotion in Inducing Specific Human Capital Acquisition," The Quarterly Journal of Economics, Oxford University Press, vol. 108(2), pages 523-534.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hirokatsu Asano & Takahiro Ito & Daiji Kawaguchi, 2013. "Why Has the Fraction of Nonstandard Workers Increased? A Case Study of Japan," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(4), pages 360-389, September.
    2. NAKABAYASHI, Masaki, 2011. "Acquired Skills and Learned Abilities: Wage Dynamics of Blue-collar Workers in Internal Labor Markets," ISS Discussion Paper Series (series F) f153, Institute of Social Science, The University of Tokyo, revised Apr 2012.
    3. Kato, Takao & Ogawa, Hiromasa & Owan, Hideo, 2016. "Working Hours, Promotion and the Gender Gap in the Workplace," IZA Discussion Papers 10454, Institute for the Study of Labor (IZA).
    4. Marianna Belloc & Samuel Bowles, 2009. "International Trade, Factor Mobility and the Persistence of Cultural-Institutional Diversity," UMASS Amherst Economics Working Papers 2009-08, University of Massachusetts Amherst, Department of Economics.
    5. Nakabayashi, Masaki, 2011. "Schooling, employer learning, and internal labor market effect: Wage dynamics and human capital investment in the Japanese steel industry, 1930-1960s," MPRA Paper 30597, University Library of Munich, Germany.
    6. Jenny Kragl & Julia Schmid, 2006. "Relational Contracts and Inequity Aversion," SFB 649 Discussion Papers SFB649DP2006-085, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    7. Joshua L. Rosenbloom & William A. Sundstrom, 2009. "Labor-Market Regimes in U.S. Economic History," NBER Working Papers 15055, National Bureau of Economic Research, Inc.
    8. Hirokatsu Asano & Takahiro Ito & Daiji Kawaguchi, 2011. "Why Has the Fraction of Contingent Workers Increased? A Case Study of Japan," IDEC DP2 Series 1-3, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
    9. NAKABAYASHI, Masaki, 2011. "Extended Schooling and Internalized Training: Skill Elements Evolution of Blue-collar Workers in an Internal Labor Market," ISS Discussion Paper Series (series F) f157, Institute of Social Science, The University of Tokyo, revised Aug 2012.
    10. Kawaguchi, Daiji & Ueno, Yuko, 2013. "Declining long-term employment in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 28(C), pages 19-36.
    11. Jenny Kragl & Julia Schmid, 2009. "The Impact of Envy on Relational Employment Contracts," Post-Print hal-00723632, HAL.
    12. Shingo Ishiguro, 2016. "Macroeconomic Dynamics with Limited Commitment in Financial and Labor Contracts," Discussion Papers in Economics and Business 16-25, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
    13. Burnette, Joyce & Stanfors, Stanfors, 2018. "Understanding the gender gap among turn-of-the-century Swedish compositors," Working Paper Series 2018:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.

    More about this item

    JEL classification:

    • N30 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - General, International, or Comparative
    • N40 - Economic History - - Government, War, Law, International Relations, and Regulation - - - General, International, or Comparative

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jechis:v:63:y:2003:i:03:p:625-665_54. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Keith Waters). General contact details of provider: http://journals.cambridge.org/jid_JEH .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.