The Productivity Effects of Participatory Employment Practices: Evidence from New Japanese Panel Data

We report the first results for Japanese firms on the effects of clusters of participatory employment practices (or participation/employee involvement at the top level as well as at the grassroots level, and financial participation) by estimating production functions using new panel data. We find that the introduction of a group of complementary practices will lead to a significant 8–9 percent increase in productivity. However, the full productivity effect is felt only after a long developmental period.