Seminar with Professor Takao Kato: ‘Good Jobs and Bad jobs in Japan: 1982-2007’

Inequality in Japan is said to be closely related to sharp labor market segmentation--the primary (good job) segment characterized by high wage/benefit, job security, and opportunity for training and development and the secondary (bad job) segment characterized by the lack of such attributes. This paper provides novel evidence on changes (or lack thereof) in the nature and scope of labor market segmentation in Japan over the last three decades. Specifically we take advantage of the Japanese government’s recent relaxation of the data release policy, and analyze micro data from the Employment Status Survey (ESS) over 1982-2007. 

 

First, the literature often defines the primary and secondary segments, using information on whether or not a worker is on a fixed-term contract or on an indefinite contract. We provide new evidence that such a de jure definition of labor market segmentation is less useful than an alternative de fact definition—whether a worker is termed as a standard employee (seishain) in the place of her employment. Second, using our preferred de facto definition, we confirm that the size of the good job segment relative to the bad job segment has been indeed falling steadily over the last three decades. However, when we take into consideration transition from self-employment to employment, the most significant compositional shift of the Japanese labor market over the last decades is found to be a steady and substantive shift from self-employment to the bad job segment. Such a shift is found to be particularly notable for women, dwarfing any transition from the good job to the bad job segment. We further find evidence that such a compositional change from self-employment to the bad job segment is likely to be a shift from one kind of bad jobs to another kind of bad jobs rather than from good jobs to bad jobs. 

 

As such, our findings cast doubt on the popular narrative of the steady deterioration of job quality in Japan. However, for one particular group of Japanese workers—youth, we find compelling evidence in support of the popular narrative. Especially all progresses that young women made in enhancing their share of standard employment during Japan’s high growth decade in the 1980s are found to be entirely undone during the Lost Decade.

 

Takao Kato is W.S. Schupf Professor of Economics and Far Eastern Studies at Colgate University. He is IZA Research Fellow, Research Associate of Center on Japanese Economy and Business at Columbia University, Center for Corporate Performance at Aarhus School of Business, and Tokyo Center for Economic Research. 

 

Takao Kato undertook some of the earliest econometric analysis of employee participation and innovative work practices in Japan and Korea. While continuing to work in this area, he has also been studying corporate governance and executive compensation in Japan, Korea, and China. Kato's most recent research involves econometric case studies of firms in the U.S., China, Finland, Denmark, and Japan, with particular focus on the nature and effects of high-performance work practices as well as career development and promotion tournament. His work has appeared in a variety of refereed journals such as American Economic Review, Review of Economics and Statistics, Industrial and Labor Relations Review, Industrial Relations, Journal of Comparative Economics, Journal of Economic Behavior and Organization, etc.