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Adjustments of regular and non-regular workers to exogenous shocks: Evidence from exchange rate fluctuation

Izumi Yokoyama, Kazuhito Higa and Daiji Kawaguchi ()
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Izumi Yokoyama: Graduate School of Economics, Hitotsubashi University
Kazuhito Higa: Economic and Social Research Institute, Cabinet Office

No 18-E-2, Bank of Japan Working Paper Series from Bank of Japan

Abstract: We investigate the heterogeneous adjustments of regular and non-regular workers exploiting the exchange rate fluctuation and heterogeneous dependence on international trade across firms as a source of exogenous variation. An analysis of panel data of Japanese manufacturers reveals that the appreciation of Japanese Yen spontaneously decreases the sales of exporters and the employment of non-regular workers, but it moderately reduces the employment of regular workers with a time lag. Firms relying heavily on exporting tend to implement more significant adjustments of non-regular employment in response to exchange rate shocks. This finding provides support for the claim that firms are likely to adjust non-regular workers to absorb exogenous shocks and to insulate regular workers from the shocks in an uncertain business environment.

Keywords: Exchange Rate; Permanent Shocks; Temporary Shocks (search for similar items in EconPapers)
JEL-codes: E24 F16 F31 (search for similar items in EconPapers)
Date: 2018-03-05
New Economics Papers: this item is included in nep-mac
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