Job Creation and Destruction at the Levels of Intra-firm Sections, Firms, and Industries in Globalization: The case of Japanese manufacturing firms

Author Name ANDO Mitsuyo (Keio University) / KIMURA Fukunari (Keio University / ERIA)
Creation Date/NO. July 2017 17-E-100
Research Project East Asian Industrial Productivity
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This paper investigates globalizing activities of Japanese manufacturing firms and their domestic adjustments in terms of domestic employment since the 2000s. A unique feature of this paper is to apply the job creation (JC)/job destruction (JD) method to changes in domestic employment at three different stages, i.e., industry level, firm level, and intra-firm section level, with a distinction among three types of firms, namely, expanding multinational enterprises (MNEs), non-expanding MNEs, and local firms. The paper also examines domestic adjustments to import competition. Major findings include: (i) de-industrialization advances in the early 2000s, but the shrinkage of manufacturing industry is not observed after that, (ii) both gross job creation and gross job destruction at firm and intra-firm section levels are much larger than net changes in all periods, showing the restructuring dynamism, firm heterogeneity, and active adjustments within firms, (iii) gross changes are widely different among three periods at the industry level, (iv) small and medium enterprises (SMEs) actively contribute to net job creation (or less net job destruction), compared with large firms, (v) multinational SMEs that expand foreign operations enlarge domestic employment in total, intensify headquarters (HQ) services, and almost maintain or expand manufacturing activities, in all periods, unlike other types of SMEs, (vi) multinational large firms that expand foreign operations increase domestic employment in total as well as employment engaged in HQ services and manufacturing activities, compared with other types of large firms, except in the early 2000s when both the manufacturing industry as a whole and manufacturing activities significantly shrunk, and vii) negative effects of import competition on domestic employment seem to exist particularly in the early 2000s, but such a tendency is becoming weak, and rather globalizing corporate activities contribute to the expansion of domestic employment by extending complementary activities at home.