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Japan’s dual labor market and its macroeconomic characteristics

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  • Hirokazu Mizobata

    (Kansai University)

Abstract

This study examines the characteristics of Japan’s dual labor market, which consists of standard and non-standard employment. I conduct labor stock and flow analyses using Japanese Labour Force Survey data from 2002 to 2022. The stock analysis suggests that, in the long run, non-standard employment improves labor market conditions, such as employment and unemployment rates. Changes in the composition of standard and non-standard employment reduce the average hours per worker in the long run but play a limited role over the business cycles. The flow analysis reveals that inflows and outflows involving non-standard employment have relatively significant effects on changes in employment and unemployment rates. This feature of non-standard employment is more pronounced for females and young individuals. The flow analysis also shows that within-employment reallocation, that is, transitions between standard and non-standard employment, primarily determines the changes in the share of non-standard employment. The sluggish movement between these two types of contracts leads to a persistently high level of non-standard employment in Japan.

Suggested Citation

  • Hirokazu Mizobata, 2024. "Japan’s dual labor market and its macroeconomic characteristics," Empirical Economics, Springer, vol. 67(1), pages 165-196, July.
  • Handle: RePEc:spr:empeco:v:67:y:2024:i:1:d:10.1007_s00181-024-02555-6
    DOI: 10.1007/s00181-024-02555-6
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    More about this item

    Keywords

    Non-standard employment; Labor market stocks; Labor market flows; Working hours; Variance decomposition;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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