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Employment Adjustments of Regular and Non-Regular Workers to Exogenous Shocks: Evidence from Exchange-Rate Fluctuation

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  • Izumi Yokoyama
  • Kazuhito Higa
  • Daiji Kawaguchi

Abstract

The authors investigate the adjustments in employment of regular and non-regular workers, exploiting the exchange-rate fluctuation and heterogeneous dependence on international trade across firms as a source of exogenous variation. An analysis of panel data of Japanese manufacturers reveals that the appreciation of the Japanese yen spontaneously decreased the sales of exporters and the employment of non-regular workers, but it did not reduce the employment of regular workers. This finding provides support for the claim that firms are likely to adjust the employment of non-regular workers to absorb exogenous shocks and to insulate regular workers from the shocks in an uncertain business environment. In exploring the mechanism driving these results, the authors also find that exporters use the employment of non-regular workers and wages of regular workers as adjustment margins for the exchange-rate fluctuation to hoard regular workers, who presumably hold higher levels of firm-specific human capital.

Suggested Citation

  • Izumi Yokoyama & Kazuhito Higa & Daiji Kawaguchi, 2021. "Employment Adjustments of Regular and Non-Regular Workers to Exogenous Shocks: Evidence from Exchange-Rate Fluctuation," ILR Review, Cornell University, ILR School, vol. 74(2), pages 470-510, March.
    • Handle: RePEc:sae:ilrrev:v:74:y:2021:i:2:p:470-510
    DOI: 10.1177/0019793919887961
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    Cited by:

    1. Akesaka, Mika & Kikuchi, Nobuyoshi, 2024. "The effects of gender-specific local labor demand on birth and later outcomes," Labour Economics, Elsevier, vol. 90(C).
    2. Fukai, Taiyo & Kawaguchi, Daiji & Kondo, Ayako & Yokoyama, Izumi, 2024. "How do firms attain internal and external flexibility of employment?," Labour Economics, Elsevier, vol. 91(C).
    3. Hayakawa, Kazunobu & Ito, Tadashi & Urata, Shujiro, 2021. "Impacts of increased Chinese imports on Japan’s labor market," Japan and the World Economy, Elsevier, vol. 59(C).
    4. Jihan Park & Donghyun Kim, 2025. "Regional economic resilience and long-term employment growth: decomposing structural transitions in South Korean metropolitan areas," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 74(2), pages 1-29, June.
    5. Hirokazu Mizobata, 2024. "Japan’s dual labor market and its macroeconomic characteristics," Empirical Economics, Springer, vol. 67(1), pages 165-196, July.
    6. Tomohiko Noda & Daisuke Hirano, 2024. "The effect of enterprise unions on employment adjustment speed in Japanese firms," British Journal of Industrial Relations, London School of Economics, vol. 62(3), pages 645-669, September.
    7. Chiu-Wei Kuo, 2024. "Short-time work, labor hoarding, and curtailed hiring: establishment-level evidence from Japan," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 58(1), pages 1-16, December.

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