Changes in the Japanese Employment System in the Two Lost Decades

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.Seniority-based wages, Lifetime employment, Japan

How Does the First Job Matter for an Individual’s Career Life in Japan?

Exploiting annual career records of female workers constructed from the Japanese Panel Survey of Consumers (JPSC), this paper examines how the first job matters for an individual’s future job career. Using the regional unemployment rate in the year of graduation as an instrument for the first job status (i.e., regular job or not), we confirm that an individual’s first job status matters significantly for the future job status even for female workers in Japan, although the effect gradually declines over the years and effectively disappears within around ten years from graduation. However, the observed first job effect appears to depend on the post-graduation career path taken by an individual, in the sense that someone who was unsuccessful during the first job hunt at the time of graduation can make up for the negative effect if she is lucky enough to secure a job as a regular employee within a reasonable time period.youth labor market, initial labor market conditions, cost of recessions, Japan

Motives for Inter Vivos Transfers in Japan

Japanese parents’ motives for inter vivos gifts to their children are investigated in this paper. Firstly, the frequency of gift receipts is examined to obtain information in order to make conjectures about the motives. For instance, if respondents receive gifts annually, this provides reason to think that the motive is to reduce inheritance taxes; conversely, if respondents receive gifts only rarely, other motives are likely to be more important. Since the results of this paper indicate that gift receipts are not frequent, it seems that few parents make gifts on a regular basis to save inheritance tax. Finally, an estimation of the effects of life events and recipients’ characteristics on gift receipts and their amounts is given. The regression results suggest that the motive for gifts stems from a parental desire to ease children’s liquidity constraints, since respondents tend to have received gifts when they were young, and when there was a major life event involving large expenditures

Health Impacts on Labor Participation of Elderly Japanese Males

The main object of this study is to investigate the relationship between individuals’ health status and labor participation among middle-aged and elderly males in Japan using a unique panel dataset. Our analysis focuses on three types of health indicators based on respondents’ medical history in the three years preceding the survey. To adjust for the potential endogeneity of the health variables, we use individuals’ body mass index at age 30 and their parents’ medical history as instrumental variables. Our empirical results show that a deterioration in health increases the probability of not working and being retired and, moreover, tends to decrease individuals’ average working hours per week. Further, splitting our sample, we find that, compared with males under 60 years of age, the work status of males aged 60 or over is significantly more likely to be affected by having one additional illness and suffering from a lifestyle disease than that of under 60s

The Impact of Intergenerational Transfers on Household Wealth Inequality in Japan and the United States

To help shed light on the implications of intergenerational transfers for wealth inequality, this paper uses data for Japan and the United States to examine whether individuals who receive intergenerational transfers from their parents are more likely to leave bequests to their children than those who do not. The estimation results show that the receipt of intergenerational transfers from parents and/or parents-in-law increases the likelihood of individuals leaving bequests to their children in both Japan and the United States, which in turn is likely to contribute to the persistence or widening of wealth disparities. However, such a tendency is found to be stronger among less-better-off households in both countries, and this may help alleviate the disequalizing effect of intergenerational transfers on the distribution of wealth, at least to some extent

A reappraisal of the incidence of employer contributions to social security in Japan

This paper reappraises Tachibanaki and Yokoyama (2008) -an empirical analysis that indicates no apparent backward shifting of employer social insurance contributions- by modifying their empirical strategy. First, we attempt to control for a spurious positive correlation between wages and employer's contribution rates by trend variables. Second, we exclude two industries from our sample that have small numbers of workers and establishments to remove sampling errors in wages. Our results imply that the social insurance burden shifts back on to employees to a certain extent, contrary to Tachibanaki and Yokoyama (2008). Our finding is consistent with other existing studies

Investment responses to Japanese tax reforms: A cross-industry comparison

This paper examines the investment responses to past Japanese tax reforms for individual industries. To identify the tax effect, this paper estimates investment functions by using a covariate of the change in tax-adjusted q caused by tax reform. This method alleviates the measurement error problem and enables the derivation of estimates indicating the valid adjustment cost of investment. Moreover, the findings suggest that firms' investment responded significantly to tax reforms in the 1980s in general. Also, investments of only a few industries responded to those in the late 1990s, implying that the manner of investment response slightly differs among industries.Tax reform Investment Tax-adjusted q