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Japanese Lifetime Employment: A Century's Perspective

Author

Listed:
  • Moriguchi, Chiaki

    () (Dept. of Economics, Northwestern University, Evanston, Illinois)

  • Ono, Hiroshi

    () (Texas A&M University)

Abstract

This paper examines the origins and dynamic evolution of the lifetime employment system in Japan from the beginning of the 20th century to present. Based on the historical perspective developed in the paper, we derive implications to the future course of the Japanese employment system. In this paper, we view lifetime employment as an economic as well as social institution, characterized by an implicit contract and reciprocal exchange of trust, goodwill, and commitment between employers and workers. We argue that this institution emerged as an equilibrium outcome of the dynamic interactions among management, labor, and government and became an integral part of the nation's employment system over the past hundred years, reinforced by complementary institutions such as state welfare policies, labor laws, corporate governance, social norms, family values, and education system. Based on our long-run historical analysis, we reevaluate the cost and benefit both in terms of economic and social of the lifetime employment system and explore the factors that determine its efficiency and stability. We emphasize the importance of understanding labor market conditions, technology and the nature of human capital, interactions between social and economic aspects of employment relations, and the role of complementary institutions. The paper concludes by assessing changes in these factors in the post-bubble period, offering some insights to the future course of the Japanese employment system.

Suggested Citation

  • Moriguchi, Chiaki & Ono, Hiroshi, 2004. "Japanese Lifetime Employment: A Century's Perspective," EIJS Working Paper Series 205, Stockholm School of Economics, The European Institute of Japanese Studies.
  • Handle: RePEc:hhs:eijswp:0205
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    File URL: http://swopec.hhs.se/eijswp/papers/eijswp0205.pdf
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    References listed on IDEAS

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    4. 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.
    5. Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June.
    6. Peter AUER & Sandrine CAZES, 2000. "The resilience of the long-term employment relationship: Evidence from the industrialized countries," International Labour Review, International Labour Organization, vol. 139(4), pages 379-408, December.
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    Citations

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    Cited by:

    1. Kambayashi, Ryo & Kato, Takao, 2012. "Good Jobs, Bad Jobs, and the Great Recession: Lessons from Japan's Lost Decade," IZA Discussion Papers 6666, Institute for the Study of Labor (IZA).
    2. Dessi, Roberta & Zhao, Xiaojian, 2014. "Over-Confidence, Shame and Investments," IDEI Working Papers 838, Institut d'Économie Industrielle (IDEI), Toulouse.
    3. repec:eee:jeborg:v:145:y:2018:i:c:p:474-494 is not listed on IDEAS
    4. Dessi, Roberta & Zhao, Xiaojian, 2011. "Self-Esteem, Shame and Personal Motivation," TSE Working Papers 10-191, Toulouse School of Economics (TSE), revised Dec 2013.
    5. KATO Takao & MIYAJIMA Hideaki & OWAN Hideo, 2016. "Does Employee Stock Ownership Work? Evidence from publicly-traded firms in Japan," Discussion papers 16073, Research Institute of Economy, Trade and Industry (RIETI).
    6. Dessí, Roberta & Zhao, Xiaojian, 2018. "Overconfidence, stability and investments," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 474-494.
    7. 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.
    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. Kato, Takao., 2016. "Productivity, wages and unions in Japan," ILO Working Papers 994904643402676, International Labour Organization.
    10. Kambayashi, Ryo & Kato, Takao, 2011. "Long-term Employment and Job Security over the Last Twenty-Five Years: A Comparative Study of Japan and the U.S," IZA Discussion Papers 6183, Institute for the Study of Labor (IZA).
    11. Keishi Fujiyama, 2016. "Fixed Asset Impairment Accounting and Employee Negotiations: Evidence from Japan," Discussion Paper Series DP2016-10, Research Institute for Economics & Business Administration, Kobe University, revised Jan 2017.
    12. KATO Takao & KODAMA Naomi, 2016. "Corporate Social Responsibility and Gender Diversity in the Workplace: Evidence from Japan," Discussion papers 16063, Research Institute of Economy, Trade and Industry (RIETI).

    More about this item

    Keywords

    Japan; institutional change; lifetime employment; implicit contract; labor laws; social norms; war; zaibatsu; state welfare policies; division of labor; gender; demand-side shocks; supply-side shocks.;

    JEL classification:

    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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