Effect of Work-Life Balance Practices on Firm Productivity: Evidence from Japanese firm-level panel data

Author Name YAMAMOTO Isamu (Keio University) / MATSUURA Toshiyuki (Keio University)
Creation Date/NO. December 2012 12-E-079
Research Project Reform of Labor Market Institutions
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This paper examines how firm practices that could contribute to worker attainment of work-life balance (WLB) affect the total factor productivity (TFP) of a firm, by using panel data of Japanese firms from the 1990s. We observed a positive correlation between the WLB practices and TFP among sampled firms. However, that correlation vanished when we controlled for unobserved firm heterogeneity, and we found no general causal relationship in which WLB practices increase firm TFP in the medium or long run. For firms with the following characteristicsmdash;large, manufacturing, and have exhibited labor hoarding during recessionsmdash;we found positive and sizable effects. Since these firms are likely to incur large fixed employment costs, we infer that firms investing in firm-specific human skills or having large hiring/firing costs can benefit from WLB practices through a decrease in turnover or an increase in recruiting effectiveness.

This is the English version of the Japanese Discussion Paper (11-J-032) with some additional information and changes.

Published: Isamu Yamamoto, Toshiyuki Matsuura, 2014. "Effect of Work-Life Balance Practices on Firm Productivity: Evidence from Japanese Firm-level Panel Data," The B.E. Journal of Economic Analysis and Policy, Vol. 14(4), pp. 1677-1708.