Long-term Employment in Japan: Past and Present

This paper revisits long-term employment practices in Japan and provides new evidence on their evolution over 1982–2022, extending prior work to cover the most recent decades marked by the global Great Recession and the COVID-19 pandemic (postwar Japan's two largest recessions). Contrary to the widespread view that Japan’s long-term employment system has eroded since the 1990s, we find that the estimated 10-year job retention rates have remained remarkably stable over the past four decades. In particular, prime-age workers with at least five years of tenure (core employees) continue to exhibit consistently high retention rates even during postwar Japan's two largest recessions. Although job stability among young entry-level workers has declined significantly, cohort analysis shows that this early-career instability does not persist. Most workers eventually transition into long-term employment as they age. We also find no evidence of a decline in the overall share of core employees, although younger male cohorts exhibit temporary delays in accumulating long tenure. Overall, our findings point to the resilience of Japan’s long-term employment system and suggest that policy discussions should be grounded in its continued relevance.