Chapter

Total Labor Costs and the Employment Adjustment Behavior of Large Japanese Firms

Edited by Yoshifumi Nakata and Ryoji Takehiro

in Labor Markets and Firm Benefit Policies in Japan and the United States

Published by University of Chicago Press

Published in print October 2003 | ISBN: 9780226620947
Published online February 2013 | e-ISBN: 9780226620954 | DOI: http://dx.doi.org/10.7208/chicago/9780226620954.003.0006
Total Labor Costs and the Employment Adjustment Behavior of Large Japanese Firms

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The tradition of long-term job security in Japan implies some potential impediments to downsizing at Japanese firms, or at least raises the question of how companies in Japan respond to a decline in demand for their products. This chapter examines how firms absorb demand fluctuation in Japan, focusing on the role of adjusted work hours, the inflow of new workers, the retirement of older workers, and layoffs. The findings suggest that the employment adjustment practices of leading Japanese firms reflect basic economic principles. Firms adjust employment levels and work hours in response to fluctuations in output and the relative price of labor.

Keywords: employment adjustment; job security; labor costs; work hours; demand fluctuations; employment levels

Chapter.  6426 words.  Illustrated.

Subjects: Business and Management

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