Good Jobs and Bad Jobs in Japan: 1982-2007

Kambayashi, Ryo; Kato, Takao

Governments around the world are increasingly aware of the need to promote the creation of not just more jobs, but also better jobs. This paper provides new evidence and insights on changes (and lack thereof) in Japan’s labor market segmentation between the primary (good job) segment and the secondary (bad job) segment over the last twenty-five years. During this time, the Japanese economy transitioned from a high-growth era to the Lost Decade to a quiet recovery. Specifically, we take advantage of the Japanese government’s recent relaxation of its data release policy, and analyze micro data from the Employment Status Survey (ESS) from 1982-2007. First, the literature often defines the primary 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 a standard employee (seishain) in the place of his or 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 segment 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 type of bad jobs to another type 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. However, for one particular group of Japanese workers – youth – we find compelling evidence in support of the popular narrative. This is especially true for the progress that young women made in enhancing their share of standard employment during Japan’s high growth decade in the 1980s; it was found to be entirely undone during the Lost Decade. Lastly, we provide evidence pointing to globalization as a possible underlying force behind the changes in the compositional shift of the Japanese labor market.

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More About This Work

Academic Units
Center on Japanese Economy and Business
Center on Japanese Economy and Business, Graduate School of Business, Columbia University
Center on Japanese Economy and Business Working Papers, 348
Published Here
June 10, 2016