Temporal changes in factor adjustment of the Japanese manufacturing industry

Sangho Kim

Cogent Economics & Finance, 2022, vol. 10, issue 1, 2122191

Abstract: This study investigated temporal changes in factor adjustment of the Japanese manufacturing industry by applying a dynamic factor model, in which labor and capital were quasi-fixed to a panel of industries from 1972 to 2012. Estimations show that the adjustment speeds, with which factors approach their optimum levels, have increased over the period. Particularly, factor adjustment rates have significantly increased since 2000. The estimations suggest that Japanese manufacturers have become more flexible in hiring workers and faster in making investments, which reduces adjustment cost significantly. This dynamic gain is ignored from static analysis, underestimating the benefit of labor market reform. The study suggests that policymakers should consider dynamic factor adjustment in assessing policy impacts accurately when implementing an industrial policy.

Date: 2022
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://hdl.handle.net/10.1080/23322039.2022.2122191 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:oaefxx:v:10:y:2022:i:1:p:2122191

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/OAEF20

DOI: 10.1080/23322039.2022.2122191

Access Statistics for this article

Cogent Economics & Finance is currently edited by Steve Cook, Caroline Elliott, David McMillan, Duncan Watson and Xibin Zhang

More articles in Cogent Economics & Finance from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().