Japanese Lifetime Employment: A Century's Perspective

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.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.

The Evolution of Income Concentration in Japan, 1886-2002: Evidence from Income Tax Statistics

This paper studies the evolution of income concentration in Japan from 1886 to 2002 by constructing long-run series of top income shares and top wage income shares, using income tax statistics. We find that (1) income concentration was extremely high throughout the pre-WWII period during which the nation underwent rapid industrialization; (2) a drastic de-concentration of income at the top took place in 1938-1945; (3) income concentration has remained low throughout the post-WWII period despite the high economic growth; and (4) top income composition in Japan has shifted dramatically from capital income to employment income over the course of the 20th century. We attribute the precipitous fall in income concentration during WWII primarily to the collapse of capital income due to wartime regulations and inflation. We argue that the change in the institutional structure under the occupational reforms made the one-time income de-concentration difficult to reverse. In contrast to the sharp increase in wage income inequality observed in the United States since 1970, the top wage income shares in Japan have remained remarkably stable over the recent decades. We show that the change in technology or tax policies alone cannot account for the comparative experience of Japan and the United States. Instead we suggest that institutional factors such as corporate governance and union structure are important determinants of wage income inequality.

Hard Spheres: Crystallization and Glass Formation

Motivated by old experiments on colloidal suspensions, we report molecular dynamics simulations of assemblies of hard spheres, addressing crystallization and glass formation. The simulations cover wide ranges of polydispersity s (standard deviation of the particle size distribution divided by its mean) and particle concentration. No crystallization is observed for s > 0.07. For 0.02 < s < 0.07, we find that increasing the polydispersity at a given concentration slows down crystal nucleation. The main effect here is that polydispersity reduces the supersaturation since it tends to stabilise the fluid but to destabilise the crystal. At a given polydispersity (< 0.07) we find three regimes of nucleation: standard nucleation and growth at concentrations in and slightly above the coexistence region; "spinodal nucleation", where the free energy barrier to nucleation appears to be negligible, at intermediate concentrations; and, at the highest concentrations, a new mechanism, still to be fully understood, which only requires small re-arrangement of the particle positions. The cross-over between the second and third regimes occurs at a concentration, around 58% by volume, where the colloid experiments show a marked change in the nature of the crystals formed and the particle dynamics indicate an "ideal" glass transition

Discrete Midpoint Convexity

For a function defined on a convex set in a Euclidean space, midpoint convexity is the property requiring that the value of the function at the midpoint of any line segment is not greater than the average of its values at the endpoints of the line segment. Midpoint convexity is a well-known characterization of ordinary convexity under very mild assumptions. For a function defined on the integer lattice, we consider the analogous notion of discrete midpoint convexity, a discrete version of midpoint convexity where the value of the function at the (possibly noninteger) midpoint is replaced by the average of the function values at the integer round-up and round-down of the midpoint. It is known that discrete midpoint convexity on all line segments with integer endpoints characterizes L$^{\natural}$-convexity, and that it characterizes submodularity if we restrict the endpoints of the line segments to be at $\ell_\infty$-distance one. By considering discrete midpoint convexity for all pairs at $\ell_\infty$-distance equal to two or not smaller than two, we identify new classes of discrete convex functions, called local and global discrete midpoint convex functions, which are strictly between the classes of L$^{\natural}$-convex and integrally convex functions, and are shown to be stable under scaling and addition. Furthermore, a proximity theorem, with the same small proximity bound as that for L$^{\natural}$-convex functions, is established for discrete midpoint convex functions. Relevant examples of classes of local and global discrete midpoint convex functions are provided.Comment: 39 pages, 6 figures, to appear in Mathematics of Operations Researc

The Kyoto University Quarterly Model of the Japanese Economy (<Special Issue>Proceedings of the Asian Sub-Link Project Symposium)

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