Changes in the Japanese Employment System in the Two Lost Decades

Junya Hamaaki, Masahiro Hori, Saeko Maeda and Keiko Murata

No 511, PIE/CIS Discussion Paper from Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University

Abstract: Despite changes in the economic and social environment following the burst of the bubble economy in the early 1990s, studies on the Japanese employment system so far have detected few major changes in seniority-based wage or lifetime employment patterns. Using recent microdata from the Basic Survey on Wage Structure, this paper takes another look at developments in these two key elements of the Japanese employment system. In contrast with previous studies, we do find evidence that the two practices are eroding and that, hence, the traditional employment system overall has begun to unravel. Specifically, with regard to seniority wages, we found, for example, that the age-wage profile has become flatter in recent years, especially for employees in the middle and final phase of their career. And as for lifetime employment, we found a clear downward trend in the share of lifetime employees among younger, university-educated workers from the early 2000s. Taken together, the findings suggest that a growing share of educated younger workers choose to leave indefinite-contract jobs due to the poor prospects for seniority-based wage progression, while older workers choose to stay in their present job despite stagnating or falling wages, since it is more difficult for them to find alternative employment.

Keywords: Seniority-based wages; Lifetime employment; Japan (search for similar items in EconPapers)
JEL-codes: J01 J21 J31 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2011-03
New Economics Papers: this item is included in nep-age and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

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Related works:
Journal Article: Changes in the Japanese Employment System in the Two Lost Decades (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:hit:piecis:511

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