The generation that started its working life during the latter half of the 1990s after the bubble-burst faced severe difficulty in finding jobs with good working conditions.
But although they may have landed a job that wasn't their first choice, they still had the chance to find opportunities to move to a better job and overcome the initial disadvantage. However, research has shown that the state of the economy at the time of graduation has a lasting and significant impact on their later working life.
When the economic situation at the time of graduation is unfavorable, workers are likely to stay in low-wage jobs even when economic conditions start to pick up. In addition, many studies by Japanese scholars have shown that once a worker starts as a non-regular hire, he or she is likely to remain as a non-regular employee 10 years later.
When the impact of the state of the labor market at the time of graduation lasts for several years after graduation, the situation is called a "generation effect." A comparative study of such generation effect in Japan and the United States conducted by Keio University Professor Soichi Ota, University of Tokyo Professor Yuji Genda, and Yokohama National University Associate Professor Ayako Kondo demonstrated that it is stronger in Japan.
Their findings suggest that opportunities to obtain jobs that enable the accumulation of skills are more concentrated for new graduates in Japan compared to those in the United States. Although there are advantages of the recruiting system in Japan where new graduates are employed all at once and trained in the long-term perspective, if one fails to grasp such an opportunity, it is difficult to get a second chance.
After the financial crisis in 2008, many countries faced the economic slowdown, and the unemployment rate of young people rose. As such, whether the rise in the employment rate among young people will have a long-term effect on their later working life has attracted much attention. Empirical research conducted in many countries has shown that there is indeed a long-term negative generation effect on those who graduated during economic downturns.
It is pointed out that, against the backdrop of the long-term effect from the time of graduation, a structure may exist in which if a person cannot obtain a decent job while young, he/she will not be able to grasp an opportunity to accumulate the proper skills. This is an area which requires further study.
* Translated by RIETI from the original Japanese "Yasashii Keizaigaku" column in the October 23, 2013 issue of Nihon Keizai Shimbun.
