#98-DOF-30 "Is White-collar Productibiry Low in Japan?: Evidence from 
            the Electrical Machinery Industry" 
           (Takanobu Nakajima, Yoshiaki Maeta, Kozo Kiyota, November
            1998.) 

A WHOLE SENTENCE


Abstract

    In recent searches for a scapegoat for Japan's long-term recession
since 1992, white-collar sections of firms have been singled out. The 
basis of this discussion is an unproven proposition: productivity of a
white-collar section is extremely low in Japan. This proposition has 
been reinforced by questionnaire surveys' results from firms and 
seemingly signficant correlations between macro statistics. In this 
paper, we try to estimate a white-collar section's Total Factor 
Productivity (TFP) by using a simple production model. Assuming that a
firm's output is a combination of outputs from a production section 
and a non-production section, we can deduce a non-production section's
TFP by subtracting a production section's contribution from the whole 
firm's TFP. The former can be captured from the data of The Census of 
Manufactures (CM) by MITI, and the latter from The Annual Security 
Reports (SR), by the Japanese commercial firms listed on the Stock 
Exchange.
    The examined industry is the Japanese electrical machinery 
industry which, everyone believes, has been enjoying the highest 
productivity growth since Japan's rapid economic growth period. The 
observation period selected is from 1985 to 1993 because of the data 
availability. The empirical results are striking. During this period, 
including the time of the recession after the strong Yen period, the 
Bubble-Economy, and the recession after its collapse, a representative
firm's TFP was declining by 0.70 percent. Out of this value, the 
contribution of a production section was - 1.85 percentage points, and
that of a non-production section was 1.16 percentage points. The 
results show that placing blame on the white-collar section is not 
accurate for Japan's electrical machinery industry from 1985 to 1993 
- actually, the white-collar section relieved the firm's TFP from 
declining.