Determinants of Structural Adjustment and Employment Use in Japan: Firm Characteristics, Offshoring and Industrial Robotics

Author Name Timothy DESTEFANO (OECD) / HANEDA Sho (Nihon University) / KWON Hyeog Ug (Faculty Fellow, RIETI)
Creation Date/NO. September 2019 19-E-067
Research Project East Asian Industrial Productivity
Download / Links


The following paper examines the determinants of structural adjustment in Japan. Unlike many other developed economies, firms in Japan rely more on changes to employment composition than mass layoffs as a method of structural change. Examining the drivers of changes in employee composition in Japan is therefore of interest to policy makers and academics alike. This research uses a novel plant-level dataset, which contains considerable detail on the types of employees used by Japanese manufacturers between 2001 and 2014. The results find a number of countervailing factors that explain the use of certain employment types. Growth in the diffusion of robotics is linked to the use of fewer non-regular employees. This appears to be partially driven by the fact that these machines positively predict the dismissal of certain types of non-regular workers. Offshoring from Japan leads to the use of a higher proportion of non-regular to regular workers, potentially due to increased competition faced by plants from abroad. Plant productivity however leads to the use of more regular to non-regular workers. Finally, establishments which experienced job dismissals in the past are substituting away from regular to non-regular workers in the present.