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Long-term Employment and Job Security over the Last Twenty-Five Years: A Comparative Study of Japan and the U.S

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  • Kambayashi, Ryo

    (Hitotsubashi University)

  • Kato, Takao

    (Colgate University)

Abstract

Taking advantage of a recent relaxation of Japanese government's data release policy, we conduct a cross-national analysis of micro data from Japan's Employment Status Survey and its U.S. counterpart, Current Population Survey. Our focus is to document and contrast changes in long-term employment and job security over the last twenty five years between the two largest advanced economies. We find that in spite of the prolonged economic stagnation, the ten-year job retention rates of core employees (employees of prime age of 30-44 who have already accumulated at least five years of tenure) in Japan were remarkably stable at around 70 percent over the last twenty-five years, and there is little evidence that Japan's Great Recession of the 1990s had a deleterious effect on job stability of such employees. In contrast, notwithstanding its longest economic expansion in history, the comparable job retention rates for core employees in the U.S. actually fell from over 50 percent to below 40 percent over the same time period. The probit estimates of job loss models in the two nations also point to the extraordinary resilience of job security of core employees in Japan, whereas showing a significant loss of job security for similar employees in the U.S. Though core employees in Japan turned out to have weathered their Great Recession well, we find that mid-career hires and young new job market entrants were less fortunate, with their employment stability deteriorating significantly. We interpret the findings, based on the theory of institutional complementarity, and derive lessons for policy makers around the world who are currently facing their own Great Recessions and developing effective policy responses.

Suggested Citation

  • 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 of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp6183
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    References listed on IDEAS

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    Cited by:

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    3. MORITA, Hodaka & TANG, Cheng-Tao, 2017. "Asset Specificity, Human Capital Acquisition, and Labor Market Competition," Discussion paper series HIAS-E-42, Hitotsubashi Institute for Advanced Study, Hitotsubashi University.
    4. Kawaguchi, Akira, 2015. "Internal labor markets and gender inequality: Evidence from Japanese micro data, 1990–2009," Journal of the Japanese and International Economies, Elsevier, vol. 38(C), pages 193-213.
    5. Sanae Tashiro, 2015. "Is being single better? An analysis of employment structure and wages of Japanese female workers," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 18(3), pages 239-254.
    6. Sebastien Lechevalier & Cyrille Dossougoin & Christophe Hurlin & Satoko Takaoka, 2014. "How did the Japanese Employment System Change?Investigating the Heterogeneity of Downsizing Practices across Firms," KIER Working Papers 883, Kyoto University, Institute of Economic Research.

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    More about this item

    Keywords

    Great Recession; job security; long-term employment; Lost Decade; Japan and the U.S.;
    All these keywords.

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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