Wages and Productivity in Firms using Foreign Trainees (in Japanese)

Yuki Hashimoto

Economic Analysis, 2011, vol. 185, 69-89

Abstract: In order to examine the characteristics of firms that use the Industrial Training and Technical Internship Program and employ low-wage intern trainees from developing countries, this paper focuses on these firms by comparing the average wage and labor productivity in the same prefecture and industry. Recent empirical works at the industry level has emphasized the negative effects of the program on the average wages of native workers. However, the model does not clarify the direction of change in the native regular workers' wage in the internal labor market when firms hire foreigners to work in the external labor market. The empirical analysis in this paper is based on JITCO publications, which helped identify the firms that use the program, the job-offer database by Hellowork, and a census of manufactures. Analysis results indicate that firms in the manufacturing industry tend to use the program to offer Japanese workers lower wages than the average wages in the same area and industry, and have lower labor productivity than the corresponding average in the same area and industry. In other words, this program is used by firms that lack competitive wages and have low levels of labor productivity. On the other hand, more than 30% of firms with foreign workers offer above average wages and achieve high labor productivity. These firms possibly share the workload efficiently between the foreign trainees and Japanese employees, leading to higher productivity.

Date: 2011
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