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Causal Mechanisms of the Decline in Long-term Employment in Japan: Evidence from Long-run Panel Data (Japanese)

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  • MURATA Keiko
  • HORI Masahiro

Abstract

Using the long-run panel data from the Japanese Longitudinal Survey on Employment and Fertility (LOSEF), this paper examines the mechanisms behind the decline in life-time employment in Japan. Focusing on the complementarity of life-time employment and seniority-based wages (i.e., an upward-sloping age-wage profile), the two key features of the traditional Japanese employment system, we find that the flattening of wage profiles is likely to lead to a decline in life-time employment. This finding holds even for male college graduates employed in large firms, i.e., for those who are often regarded as the core segment to which the Japanese employment system applies. The results suggest that life-time employment may weaken further if wage profiles continue to flatten in the future.

Suggested Citation

  • MURATA Keiko & HORI Masahiro, 2019. "Causal Mechanisms of the Decline in Long-term Employment in Japan: Evidence from Long-run Panel Data (Japanese)," Discussion Papers (Japanese) 19028, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:rdpsjp:19028
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    File URL: https://www.rieti.go.jp/jp/publications/dp/19j028.pdf
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    References listed on IDEAS

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    1. Satoshi Shimizutani & Izumi Yokoyama, 2009. "Has Japan's Long-Term Employment Practice Survived? Developments since the 1990S," ILR Review, Cornell University, ILR School, vol. 62(3), pages 313-326, April.
    2. Junya Hamaaki & Masahiro Hori & Saeko Maeda & Keiko Murata, 2012. "Changes in the Japanese Employment System in the Two Lost Decades," ILR Review, Cornell University, ILR School, vol. 65(4), pages 810-846, October.
    3. Genda, Yuji & Kurosawa, Masako, 2001. "Transition from School to Work in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 15(4), pages 465-488, December.
    4. Yukiko Abe, 2000. "A Comparison of Wage Structures in the United States and Japan: Results from Cell Mean Regressions," The Japanese Economic Review, Japanese Economic Association, vol. 51(2), pages 252-267, June.
    5. Hashimoto, Masanori & Raisian, John, 1985. "Employment Tenure and Earnings Profiles in Japan and the United States," American Economic Review, American Economic Association, vol. 75(4), pages 721-735, September.
    6. 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.
    7. Kato, Takao, 2001. "The End of Lifetime Employment in Japan?: Evidence from National Surveys and Field Research," Journal of the Japanese and International Economies, Elsevier, vol. 15(4), pages 489-514, December.
    8. repec:eee:jjieco:v:48:y:2018:i:c:p:68-84 is not listed on IDEAS
    9. Mincer, Jacob & Higuchi, Yoshio, 1988. "Wage structures and labor turnover in the United States and Japan," Journal of the Japanese and International Economies, Elsevier, vol. 2(2), pages 97-133, June.
    10. Clark, Robert L & Ogawa, Naohiro, 1992. "Employment Tenure and Earnings Profiles in Japan and the United States: Comment," American Economic Review, American Economic Association, vol. 82(1), pages 336-345, March.
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