Japan and her dealings with offshoring: An empirical analysis with aggregate data

First moves towards a real understanding of the offshoring phenomenon date back only to very recent times, with employment and productivity effects occupying much of the literature around the subject. In particular for Japan, the studies conducted so far focus on the disaggregate level and put the stress on the productivity side alone. Here I analyze both the employment and the productivity effects at the aggregate industry level, covering the years 1980-2005. Moreover, I consider all industries within the economy and take account of both materials and services offshoring. The results presented here suggest that we should expect a positive effect of services offshoring on employment, and a positive effect of materials offshoring on the growth rate of productivity.offshoring; employment; productivity;

The Japanese Lost Decade and Beyond: A Chain Reaction Theory Approach

The Japanese lost decade has become an intriguing puzzle for both economists and policy-makers alike, as the unemployment rate climbed to unprecedented levels and the growth rate of productivity decreased considerably. More recent times seem to present with a more optimistic outlook, but this is not yet the last word in the matter. In this paper we estimate two alternative multi-equation structural models descriptive of the Japanese labor market, that are then used to conduct dynamic simulations both for the lost decade period (1990-2002) and beyond (2002-2007). Our results point, primarily, to the damaging effects of the ever-increasing public debt as a major source of labor market inefficiencies. In addition, we find the fall in labor union power to have a significant easing effect on the unemployment rate, but also to be a major driver in the apparently eroding pattern of the labor income share in recent years.labor market dynamics, structural multi-equation models, chain reaction theory, simulations

Japan and her dealings with offshoring: An empirical analysis with aggregate data

First moves towards a real understanding of the offshoring phenomenon date back to very recent times, with employment and productivity effects occupying much of the literature around the subject. In particular for Japan, the studies conducted so far focus on the disaggregate level and put the stress on the productivity side alone. Here I carry out both the analyses of the employment and productivity effects at the aggregate level of the industry, covering the years 1980-2005. Moreover, I consider all industries within the economy and take account of both materials and services offshoring. The results presented here suggest that we can expect a positive effect of services offshoring on employment, and a positive effect of materials offshoring on the growth rate of productivity.offshoring; Japan; employment; productivity

Japan and Her Dealings with Offshoring: An Empirical Analysis with Aggregate Data

First moves towards a real understanding of offshoring date back to very recent times. In particular for Japan, the studies conducted so far focus alone on the productivity effects of offshoring at the firm level. Here I carry out the analysis of both the employment and productivity effects at the aggregate level of the industry, covering the years 1980-2005. Moreover, I consider all industries within the economy and take account of both services and materials offshoring. My results suggest that we should expect, on average, a positive effect of services and a negative effect of materials offshoring on employment. However, the effects are rather negligible and only amount to a 1.5 to 2 percent net loss of the change in employment. On the other hand, positive effects on the growth rate of productivity are found as a result of both types of offshoring, with larger effects from services. In particular, the average offshoring industry displays 1.4 to 1.98 additional percentage points for services and 0.48 to 0.64 for materials.offshoring, Japan, employment, productivity

More alike than different: : the Spanish and Irish labour markets before and after the crisis

This paper analyses the labour markets of Spain and Ireland, which have experienced a severe downturn in the recent global crisis as reflected by the largest increases in their unemployment rates among other developed economies. Spain and Ireland might seem at first to feature very different labour markets, which go from very tight to very flexible labour conditions. Our analysis, however, goes beyond this simplistic argument and brings to light the strong commonalities that seem to have been hidden underground. We estimate a dynamic multi-equation structural model for each country, and then offer two sets of dynamic simulations which account for the swings of the unemployment rates before and after the 2007 crisis. Our results suggest looking beyond the degree of flexibility of both labour markets, just to focus instead on other variables usually neglected by more conventional approaches. In particular, such variables as the growth of capital stock, the growth of labour productivity, and demographics, succeed in explaining a great part of the changes in unemployment in both countries.Este documento analiza los mercados laborales de España e Irlanda, que experimentaron una severa desaceleración en la reciente crisis mundial, como lo reflejan los mayores incrementos en sus tasas de desempleo entre otras economías desarrolladas. Al principio, España e Irlanda parecen tener mercados laborales muy diferentes, que van desde condiciones de trabajo muy ajustadas hasta condiciones laborales muy flexibles. Este análisis, sin embargo, va más allá de este argumento simplista y saca a la luz las fuertes similitudes que parecen haberse ocultado bajo tierra. Se estima un modelo estructural dinámico de multi-ecuaciones para cada país, y luego se ofrecen dos conjuntos de simulaciones dinámicas que dan cuenta de las oscilaciones de las tasas de desempleo antes y después de la crisis de 2007. Estos resultados sugieren mirar más allá del grado de flexibilidad de ambos mercados laborales, solo para centrarse en otras variables generalmente descuidadas por los enfoques más convencionales. En particular, variables tales como el crecimiento del stock de capital, el crecimiento de la productividad laboral y la demografía, logran explicar una gran parte de los cambios en el desempleo en ambos países.Fil: Agnese Pablo .Fil: Salvador Pablo F.. CONICET (Consejo Nacional de Investigaciones Científicas y Técnicas) - Universidad Nacional de Cuyo

More Alike than Different: The Spanish and Irish Labour Markets Before and After the Crisis

This paper analyses the labour markets of Spain and Ireland, which have experienced a severe downturn in the recent global crisis as reflected by the largest increases in their unemployment rates among other developed economies. Spain and Ireland might seem at first to feature very different labour markets, which go from very tight to very flexible labour conditions. Our analysis, however, goes beyond this simplistic argument and brings to light the strong commonalities that seem to have been hidden underground. We estimate a dynamic multi-equation structural model for each country, and then offer two sets of dynamic simulations which account for the swings of the unemployment rates before and after the 2007 crisis. Our results suggest looking beyond the degree of flexibility of both labour markets, just to focus instead on other variables usually neglected by more conventional approaches. In particular, such variables as the growth of capital stock, the growth of labour productivity, and demographics, succeed in explaining a great part of the changes in unemployment in both countries.chain reaction theory, structural multi-equation models, unemployment dynamics, simulations, PIGS

The fading 1990s in Japan: Driving forces behind the unemployment upsurge

This paper sheds new light on the causes of the unemployment upsurge in Japan during the “fading 1990s”, an unprecedented period of structural crisis. We estimate a labor market model and identify the main macroeconomic determinants of labor demand and labor supply decisions in last decades. We then conduct dynamic simulations and assess the relative contribution of these determinants to the evolution of unemployment from 1990 to 2002. Beyond the leading role exerted by the decline in productivity growth, we find the active and expansionary measures undertaken by the government had an overall negative effect on the labor market.Japan; unemployment; productivity; macroeconomic policies; chain reaction theory

Offshoring: Facts and numbers at the country level

Offshoring has lately received wide attention. Its potential effects, mainly to be materialized in employment and productivity dislocations, are yet to be fully assessed. However, some consensus has been attained as to how to proxy its theoretical definition at an aggregate level. Here we review the most conventional indices the economic literature has so far produced, and employ them to provide an overview of the extent of the phenomenon for a group of countries. Contrary to common beliefs, our data reveal that offshoring is not exclusive of large developed economies. Further, we highlight the continuing prominence of the manufacturing over the services sector, and observe that while services offshoring is on the rise, it still represents a small fraction of total offshoring.offshoring; intermediate trade; aggregate data

Japan and her dealings with offshoring: An empirical analysis with aggregate data

First moves towards a real understanding of offshoring date back to very recent times. In particular for Japan, the studies conducted so far focus alone on the productivity effects of offshoring at the firm level. Here I carry out the analysis of both the employment and productivity effects at the aggregate level of the industry, covering the years 1980-2005. Moreover, I consider all industries within the economy and take account of both services and materials offshoring. My results suggest that we should expect, on average, a positive effect of services and a negative effect of materials offshoring on employment. However, the effects are rather negligible and only amount to a 1.5 to 2 percent net loss of the change in employment. On the other hand, positive effects on the growth rate of productivity are found as a result of both types of offshoring, with larger effects from services. In particular, the average offshoring industry displays 1.4 to 1.98 additional percentage points for services and 0.48 to 0.64 for materials

The Japanese lost decade and beyond: A chain reaction theory approach

The Japanese lost decade has become an intriguing puzzle for both economists and policy-makers alike, as the unemployment rate climbed to unprecedented levels and the growth rate of productivity decreased considerably. More recent times seem to present with a more optimistic outlook, but this is not yet the last word in the matter. In this paper we estimate two alternative multi-equation structural models descriptive of the Japanese labor market, that are then used to conduct dynamic simulations both for the lost decade period (1990-2002) and beyond (2002-2007). Our results point, primarily, to the damaging effects of the ever-increasing public debt as a major source of labor market inefficiencies. In addition, we find the fall in labor union power to have a significant easing effect on the unemployment rate, but also to be a major driver in the apparently eroding pattern of the labor income share in recent years