Effects of Wages and Job Productivity on Job Creation and Destruction: Evidence from Japanese division-level employment data

This study employs a large-scale dataset to examine major theoretical factors affecting job creation and destruction in Japan. The new measurement first provides information for both job creation and job destruction pertaining to individual Japanese firms, enabling empirical work at the firm level, which was impossible in previous studies. Different from a comparative study conducted with German data, our study results indicate that wages and job productivity significantly affect job creation and destruction in Japan; namely, an increase in wages significantly decreases firms' job creation and increases their job destruction, whereas an increase in productivity significantly increases firms' job creation and reduces job destruction. Moreover, although a larger number of seishain workers, i.e., workers who are granted lifetime employment rights in Japan, helps decrease job destruction, they also decrease job creation, and the negative effect on job creation outweighs the positive effect on job destruction.