ASPECTS OF LABOR-MARKET ADJUSTMENTS IN JAPAN

This article discusses some aspects of labor market adjustments in Japan that may be relevant to the low unemployment rate there. Japanese statistics treat kyugyosha (persons not at work) as being employed, but some of these workers would be counted as unemployed in the United States. The kyugyosha group appears to increase in size during downturns and decreases during upturns, suggesting that temporarily laid-off persons are an important part of this group. Japanese employers evidently rely less on employment adjustments, and more on adjustments in hours of work and inventory, while employers in the United States rely more on employment adjustments, to deal with cyclical changes in product demand. Japanese manufacturing employment became less sensitive, and hours of work more sensitive, to demand shocks after the introduction of the Employment Insurance Law in 1975.