Japan's Exports and Employment

This paper asks how much employment is created by rising Japanese exports and how the export dependence of employment has changed over time. Using newly developed Japanese input-output table data from 1975 to 2006, this paper estimates the effect of exports on the industry's employment (i.e., direct effect) and the effect on other industries' employment (i.e., indirect effect). Estimation results indicate that the export dependence of Japan's employment gradually increased over the last three decades. In 2006, approximately 30 percent of manufacturing employment was created by exports, which is twice as much as it was in 1975. The magnitude of the indirect effect is almost the same as that of the direct effect. Less export-oriented industries sometimes have heavy export dependence of employment due to the intra-industry linkages with export-oriented industries.