Why Has the Fraction of Contingent Workers Increased? A case study of Japan

Author Name ASANO Hirokatsu (Asia University) / ITO Takahiro (Osaka University) / KAWAGUCHI Daiji (Faculty Fellow, RIETI / Hitotsubashi University)
Creation Date/NO. March 2011 11-E-021
Research Project Empirical Analysis of Japan's Labor Market: Policy Responses to Fertility Decline and Population Aging
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This paper is the English version of this Japanese Discussion Paper (11-J-051).

The fraction of contingent workers among all workers in Japan increased from 17% in 1986 to some 34% in 2008. This paper investigates the reason for this secular trend. Both demand and supply increases of contingent workers relative to regular workers are important, as evidenced by the stable relative wage to regular workers. The increase of female labor-force participation explains the supply increase, and the change of industrial composition explains the demand increase. These compositional changes explain about one quarter of the increase of contingent workers. Uncertainty surrounding product demand and the introduction of information and communication technologies increase firms' usage of contingent workers, but its quantitative effect is limited. These findings suggest that the declining importance of firm-specific human capital is a probable cause for the increase of contingent workers.

Published: Hirokatsu Asano, Takahiro Ito and Daiji Kawaguchi, 2013. "Why Has the Fraction of Nonstandard Workers Increased? A Case Study of Japan," Scottish Journal of Political Economy, Vol. 60(4), pp. 360-389