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A Lost Decade Revisited :Zombie Firms and Inefficient Labor Allocation


  • Takanori Tanaka

    () (Graduate School of Economics, Osaka University)


This paper investigates why labors wouldn ft be reallocated from contracting firms to expanding firms in the 1990s in Japan, focusing on the increase of zombie firms after the burst of the bubble economy. Main evidences are twofold. First, higher proportion of total industry labors by zombies impeded labor redeployment from zombies to non-zombies in the industry. Second, labors in zombies wouldn ft be readily shifted toward non-zombies irrespective of industry. These results show that the misallocation of credit by way of the increase of zombies was important for the decline of labor reallocation across firms.

Suggested Citation

  • Takanori Tanaka, 2006. "A Lost Decade Revisited :Zombie Firms and Inefficient Labor Allocation," Discussion Papers in Economics and Business 06-08, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP).
  • Handle: RePEc:osk:wpaper:0608

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    More about this item


    zombie firms; Lilien measure; labor reallocation; employment adjustment.;

    JEL classification:

    • E4 - Macroeconomics and Monetary Economics - - Money and Interest Rates
    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor


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