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Labor Adjustment, Productivity and Output Volatility: An Evaluation of Japan's Employment Adjustment Subsidy: Working Paper 2005-10

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  • Naomi N. Griffin

Abstract

This paper provides a theoretical examination of the impact of Japan’s Employment Adjustment Subsidy, a major employment insurance policy since 1975, on labor adjustment, productivity and output fluctuations in the iron and steel sector. A partial equilibrium industry model with heterogeneous establishments and aggregate uncertainty shows that the EAS reduces steady-state labor productivity by encouraging labor hoarding, while reducing job flows and increasing average firm-level employment. While the directly measured impact on productivity is proportional to the fraction

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  • Naomi N. Griffin, 2005. "Labor Adjustment, Productivity and Output Volatility: An Evaluation of Japan's Employment Adjustment Subsidy: Working Paper 2005-10," Working Papers 17567, Congressional Budget Office.
    • Handle: RePEc:cbo:wpaper:17567
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    Cited by:

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    2. Naomi N. Griffin & Kazuhiko Odaki, 2006. "Reallocation and Productivity Growth in Japan: Revisiting the Lost Decade of the 1990s: Working Paper 2006-02," Working Papers 17603, Congressional Budget Office.

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