The Impact of COVID-19 on Japanese Firms: Mobility and Resilience via Remote Work

Author Name KAWAGUCHI Daiji (Faculty Fellow, RIETI) / KITAO Sagiri (Senior Fellow, RIETI) / NOSE Manabu (International Monetary Fund / University of Tokyo)
Creation Date/NO. July 2021 21-E-063
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Drawing on the original survey of Japanese firms during the COVID-19 pandemic, we estimate the impact of the crisis on firms' sales, employment and hours worked per employee and roles of Work-from-Home (WfH) arrangements in mitigating negative effects. We find that the lowered mobility, induced by the state of emergency declared by the government and fear of infection, significantly contracted firms' activities. On average, a 10% reduction in mobility reduced sales by 2.8% and hours worked by 2.1%, but did not affect employment. This muted employment response is consistent with limited changes in aggregate employment at the extensive margin during COVID-19 in Japan. We find that the adoption of WfH before COVID-19 mitigated the negative impact by 55% in terms of sales and by 35% in terms of hours worked. Adapting to the crisis environment by increasing the number of employees working from home is also found to moderately reduce the negative impact on sales and work hours.

Published: Kawaguchi, Daiji, Sagiri Kitao, and Manabu Nose, 2022. "The impact of COVID-19 on Japanese firms: Mobility and resilience via remote work," International Tax and Public Finance, Volume 29, Issue 6 (2022), 1419–1449.