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Labor Market Responses to Legal Work Hour Reduction: Evidence from Japan

Author

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  • KAWAGUCHI Daiji
  • NAITO Hisahiro
  • YOKOYAMA Izumi

Abstract

Japan's labor standard law defines weekly legal work hours, and employers must pay a 25- percent wage premium for overtime. The number of legal work hours was 48 in 1987 and gradually declined to 40 by 1997. During the corresponding period, the average weekly hours of work dropped from 45 to 41, suggesting the causal effect of legal regulation on the actual hours of work. Exploiting the different timing of the regulation change by industry and establishment size, this paper estimates the causal impact of legal work hour restriction on actual hours worked. The analysis results indicate that a one-hour reduction of legal work hours led to a reduction of 0.14 actual hours worked, but it was not accompanied by a reduction in monthly cash earnings. The recruitment of new school graduates was suppressed in response to an increase in the hourly wage rate.

Suggested Citation

  • KAWAGUCHI Daiji & NAITO Hisahiro & YOKOYAMA Izumi, 2008. "Labor Market Responses to Legal Work Hour Reduction: Evidence from Japan," ESRI Discussion paper series 202, Economic and Social Research Institute (ESRI).
  • Handle: RePEc:esj:esridp:202
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    File URL: http://www.esri.go.jp/jp/archive/e_dis/e_dis202/e_dis202a.pdf
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    References listed on IDEAS

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    1. Fumio Hayashi & Edward C. Prescott, 2004. "The 1990s in Japan: a lost decade," Chapters,in: The Economics of an Ageing Population, chapter 2 Edward Elgar Publishing.
    2. Motonishi, Taizo & Yoshikawa, Hiroshi, 1999. "Causes of the Long Stagnation of Japan during the 1990s: Financial or Real?," Journal of the Japanese and International Economies, Elsevier, vol. 13(3), pages 181-200, September.
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    6. Bruno Crepon & Francis Kramarz, 2002. "Employed 40 Hours or Not Employed 39: Lessons from the 1982 Mandatory Reduction of the Workweek," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1355-1389, December.
    7. Kapteyn, Arie & Kalwij, Adriaan & Zaidi, Asghar, 2004. "The myth of worksharing," Labour Economics, Elsevier, vol. 11(3), pages 293-313, June.
    8. Boeri, Tito & Burda, Michael & Kramarz, Francis (ed.), 2008. "Working Hours and Job Sharing in the EU and USA: Are Europeans Lazy? Or Americans Crazy?," OUP Catalogue, Oxford University Press, number 9780199231027.
    9. Nymoen, Ragnar, 1989. " Wages and the Length of the Working Day. An Empirical Test Based on Norwegian Quarterly Manufacturing Data," Scandinavian Journal of Economics, Wiley Blackwell, vol. 91(3), pages 599-612.
    10. Calmfors, Lars & Hoel, Michael, 1988. " Work Sharing and Overtime," Scandinavian Journal of Economics, Wiley Blackwell, vol. 90(1), pages 45-62.
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    Citations

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    Cited by:

    1. Kawaguchi, Daiji, 2016. "Fewer school days, more inequality," Journal of the Japanese and International Economies, Elsevier, vol. 39(C), pages 35-52.
    2. Kawaguchi, Daiji & Lee, Jungmin & Hamermesh, Daniel S., 2013. "A gift of time," Labour Economics, Elsevier, vol. 24(C), pages 205-216.
    3. repec:clr:wugarc:y:2016v:42i:04p:665 is not listed on IDEAS
    4. YOKOYAMA Izumi & KODAMA Naomi & HIGUCHI Yoshio, 2016. "What Happened to Wage Inequality in Japan during the Last 25 Years? Evidence from the FFL decomposition method," Discussion papers 16081, Research Institute of Economy, Trade and Industry (RIETI).
    5. Jungmin Lee & Daiji Kawaguchi & Daniel S. Hamermesh, 2012. "Aggregate Impacts of a Gift of Time," American Economic Review, American Economic Association, vol. 102(3), pages 612-616, May.
    6. repec:clr:wugarc:y:2016v:42i:4p:665 is not listed on IDEAS
    7. Lee, Jungmin & Lee, Yong-Kwan, 2016. "Can working hour reduction save workers?," Labour Economics, Elsevier, vol. 40(C), pages 25-36.
    8. KODAMA Naomi & YOKOYAMA Izumi, 2017. "Labor Market Impact of Labor Cost Increase without Productivity Gain: A natural experiment from the 2003 social insurance premium reform in Japan," Discussion papers 17093, Research Institute of Economy, Trade and Industry (RIETI).
    9. Antal, Miklós, 2014. "Green goals and full employment: Are they compatible?," Ecological Economics, Elsevier, vol. 107(C), pages 276-286.

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