 The Path to Higher Growth: Does Revamping Japan’s Dual Labor Market Matter?Chie Aoyagi and Giovanni Ganelli No 2013/202, IMF Working Papers from International Monetary Fund Abstract: This paper argues that Japan’s excessive labor market duality can reduce Total Factor Productivity (TFP) due to a negative impact on non-regular workers’ effort and on firms’ incentives to train them. On the basis of cross-country empirical evidence, the paper proposes some reform options. In particular, our analysis suggests that reducing the difference in employment protection between regular and non-regular workers would substantially reduce labor market duality in Japan. One reform consistent with these findings is the introduction of a Single Open Ended Contract for all newly hired workers. This reform could be complemented by a shift towards a model that combines labor market flexibility and security (“flexicurity”) and by policies aimed at encouraging wage growth. Keywords: WP; worker; firm; pay; labor market; Japan; dual labor market; labor market reform; Single Open Ended Contract; labor market duality; severance pay; wage growth; regular worker; Denmark labor market system; firms incentive; worker status; workers in Japan; job satisfaction; Labor markets; Employment; Employment protection; Wages; Europe; Global (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:2013/202 Ordering information: This working paper can be ordered from Access Statistics for this paper More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC. |
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