Does revamping Japan's dual labor market matter?

Chie Aoyagi and Giovanni Ganelli

Economic Systems, 2015, vol. 39, issue 2, 339-357

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. The paper then empirically studies the determinants of labor market duality. The main result of the paper is that the level of employment protection affects duality. In particular, a higher level of employment protection of regular workers increases duality, while a higher level of protection of temporary workers reduces it. On the basis of this result, the paper also discusses some reform options to address Japan's labor market duality.

Keywords: Japan; Dual labor market; Labor market reform (search for similar items in EconPapers)
JEL-codes: J00 J01 J08 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:39:y:2015:i:2:p:339-357

DOI: 10.1016/j.ecosys.2014.11.002

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