Does revamping Japan's dual labor market matter? |
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| Institution: | 1. Department of Economics, Hankuk University of Foreign Studies, Seoul, Republic of Korea;2. College of Economics, Sungkyunkwan University, 25-2 Sungkyunkwan-ro, Jongno-gu, Seoul 03063, Republic of Korea;1. Accounting and Finance, Adam Smith Business School, University of Glasgow, Glasgow G12 8QQ, United Kingdom;2. Department of Finance, National Sun Yat-sen University, No. 70 Lienhai Rd., Kaohsiung 80424, Taiwan;3. Department of Business Administration, Universidad Carlos III de Madrid, Calle Madrid 126, 28903 Getafe, Madrid, Spain;1. Department of Finance, La Trobe University, Bundoora, Melbourne 3086, VIC, Australia;2. School of Economics, La Trobe University, Bundoora, Melbourne 3086, VIC, Australia;1. University Federico II, Naples, Italy;2. World Bank, Washington DC, USA;1. Department of Quantitative Methods, University of Economics in Bratislava, Tajovského 13, 041 30 Košice, Slovak Republic;2. Department of Economics, Faculty of Business Economics in Košice, University of Economics in Bratislava, Tajovského 13, 041 30 Košice, Slovak Republic |
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| Abstract: | This paper argues that Japan's excessive labor market duality can reduce Total Factor Productivity (TFP) due to a negative impact on non-regular workers’ effort and on firms’ incentives to train them. The paper then empirically studies the determinants of labor market duality. The main result of the paper is that the level of employment protection affects duality. In particular, a higher level of employment protection of regular workers increases duality, while a higher level of protection of temporary workers reduces it. On the basis of this result, the paper also discusses some reform options to address Japan's labor market duality. |
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| Keywords: | Japan Dual labor market Labor market reform |
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