Demand Shocks and Employment Adjustments: Changes in employee composition at exporting firms during the global financial crisis of 2008-09 (Japanese)

Miho Takizawa, Kotaro Tsuru and Kaoru Hosono

Discussion Papers (Japanese) from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This paper examines the effect of negative demand shocks on the labor composition of firms, focusing on the change in the ratio of temporary agency workers to all workers. To distinguish a causal link from product demands to employee composition from the reverse causation, we used the global financial crisis of 2008-09 as a natural experiment of demand shocks on exporting firms in Japan and analyzed their changes in employee composition. We find that firms with a higher exporting ratio, a higher temporary agency worker ratio, and a larger increase of temporary agency worker ratio before the crisis decreased their temporary agency worker ratio to a greater extent after the crisis. We also find that firms with a higher liquidity to asset ratio and a larger volatility in changes in sales decreased the temporary agency worker ratio to a lesser extent after the crisis. These results suggest that temporary agency workers serve as a buffer to demand shocks.

Pages: 18 pages
Date: 2014-02
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Persistent link: https://EconPapers.repec.org/RePEc:eti:rdpsjp:14012

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