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Flexible labor, innovation regimes and the erosion of the Japanese model: Evidence from the Basic Survey on Wage Structure

Author

Listed:
  • Ikeda, Yuya
  • Kato, Masatoshi
  • Kleinknecht, Alfred

Abstract

Due to labor market reforms around 2003–4, Japan has a growing group of ‘non-regular’ workers who are easy to fire, and have poor carrier perspectives. This marks a break with the traditional Japanese model of life-time employment that allowed for intensive in-company training and commitment of personnel. Drawing from a national wage structure survey, we find indications that employment of non-regular workers has a negative impact on productivity (proxied by wages), this negative impact being largest under innovation regimes that require a high cumulativeness of knowledge. Our findings are consistent with neo-Schumpeterian research in Europe which concluded that certain labor market rigidities, while being undesirable from a neoclassical perspective, can be useful to innovation. Our paper confirms the impression from earlier research that structural reforms of labor markets along supply-side lines are likely to be one of the reasons for a substantial decline of productivity growth in major OECD countries since about 2004/05.

Suggested Citation

  • Ikeda, Yuya & Kato, Masatoshi & Kleinknecht, Alfred, 2024. "Flexible labor, innovation regimes and the erosion of the Japanese model: Evidence from the Basic Survey on Wage Structure," Structural Change and Economic Dynamics, Elsevier, vol. 70(C), pages 333-339.
    • Handle: RePEc:eee:streco:v:70:y:2024:i:c:p:333-339
    DOI: 10.1016/j.strueco.2024.04.003
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    More about this item

    Keywords

    Cumulativeness of knowledge; Labor market flexibility; Wage penalties; Japan;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • M54 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Labor Management

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