IDEAS home Printed from
   My bibliography  Save this paper

The Role of Public Employment Services in a Developing Country: The Case of Japan in the Twentieth Century


  • Kambayashi, Ryo


Like all developed and developing economies, Japan struggled with labor market issues in the process of industrialization. The Public Employment Service (PES) was probably the only countermeasure of the Japanese government before 1938, since other labor market policies such as minimum labor standard, unemployment insurance, and unionization were highly restricted by the political climate. In this article, we discuss the importance of the institutional arrangements of the PES by examining the developing stage of the Japanese labor market. In Japan, the PES was first institutionalized officially by the Employment Exchange Act in 1921. In the wake of the Kanto earthquake disaster in 1923, the PES played a substantial role in the recovery process, which implies the capacity of the PES to reduce unemployment even in a developing economy. However, under normal economic circumstances during the 1910s and 1920s, the institutional arrangement of the PES?namely, the financial backbone of the government and the nationwide network?was not effective as shown by anecdotes and ad hoc surveys. The statistical analysis of the matching function clearly shows that the PES, at least during the 1920s, had a fundamental problem?lacking long-term relations with other economic agents. Finally, improvements were made in the PES during the 1930s to cope with the economic crisis from the Great Depression. Such improvements were realized by incorporating already-existing networks of organizations that spontaneously emerged at the grassroots level. By 1938, when the Employment Exchange Act was revised to abolish private agencies, some PES centers had already absorbed nearby private networks and the matching technique of the PES was almost the same as that of private agencies. An ad hoc physical and financial investment by the government may not lead to the provision of efficient public services, and it is important to recognize that labor market policies are based on a long-term relationship among the PES, job seekers, and employers.

Suggested Citation

  • Kambayashi, Ryo, 2013. "The Role of Public Employment Services in a Developing Country: The Case of Japan in the Twentieth Century," PRIMCED Discussion Paper Series 40, Institute of Economic Research, Hitotsubashi University.
  • Handle: RePEc:hit:primdp:40

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Margaret Stevens, 2007. "New Microfoundations For The Aggregate Matching Function," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 48(3), pages 847-868, August.
    Full references (including those not matched with items on IDEAS)

    More about this item


    public employment agency; private employment agencies; labor market intermediaries; matching function; Kanto earthquake;

    JEL classification:

    • J68 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Public Policy
    • N35 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Asia including Middle East
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hit:primdp:40. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Digital Resources Section, Hitotsubashi University Library). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.