Japanese Lifetime Employment: A Century's Perspective

Chiaki Moriguchi and Hiroshi Ono ()

No 205, EIJS Working Paper Series from Stockholm School of Economics, The European Institute of Japanese Studies

Abstract: This paper examines the origins and dynamic evolution of the lifetime employment system in Japan from the beginning of the 20th century to present. Based on the historical perspective developed in the paper, we derive implications to the future course of the Japanese employment system. In this paper, we view lifetime employment as an economic as well as social institution, characterized by an implicit contract and reciprocal exchange of trust, goodwill, and commitment between employers and workers. We argue that this institution emerged as an equilibrium outcome of the dynamic interactions among management, labor, and government and became an integral part of the nation's employment system over the past hundred years, reinforced by complementary institutions such as state welfare policies, labor laws, corporate governance, social norms, family values, and education system. Based on our long-run historical analysis, we reevaluate the cost and benefit both in terms of economic and social of the lifetime employment system and explore the factors that determine its efficiency and stability. We emphasize the importance of understanding labor market conditions, technology and the nature of human capital, interactions between social and economic aspects of employment relations, and the role of complementary institutions. The paper concludes by assessing changes in these factors in the post-bubble period, offering some insights to the future course of the Japanese employment system.

Keywords: Japan; institutional change; lifetime employment; implicit contract; labor laws; social norms; war; zaibatsu; state welfare policies; division of labor; gender; demand-side shocks; supply-side shocks. (search for similar items in EconPapers)
JEL-codes: J33 J41 J48 N35 P16 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2004-09-01
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Published in Institutional Change in Japan, Blomstrom, Magnus, La Croix, Sumner (eds.), 2006, pages 152-176, Routledge.

Downloads: (external link)
http://swopec.hhs.se/eijswp/papers/eijswp0205.pdf (application/pdf)

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:hhs:eijswp:0205

Access Statistics for this paper

More papers in EIJS Working Paper Series from Stockholm School of Economics, The European Institute of Japanese Studies The European Institute of Japanese Studies, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Nanhee Lee ().