2001 Fiscal Year Final Research Report Summary
Japanese Labor Market Institutions under the Depression in the 1990s and the Japanese Culture
| Project/Area Number |
12630047
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| Research Category |
Grant-in-Aid for Scientific Research (C)
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| Allocation Type | Single-year Grants |
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| Section | 一般 |
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| Research Field |
経済政策(含経済事情)
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| Research Institution | Hitotsubashi University |
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Principal Investigator |
ARAI Kazuhiro Hitotsubashi University, Graduate school of Economics, Professor, 大学院・経済学研究科, 教授 (40134879)
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| Project Period (FY) |
2000 – 2001
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| Keywords | culture / labor market institutions / organization / games / trust / lifetime employment / seniority wage system |
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| Research Abstract |
This research has produced a few papers in addition to a book Culture, Organization, and Labor Market Institutions- An Economic Analysis of the Japanese System. This book shows that culture strongly affects economic efficiency as well as the forms of institutions and organizations. This is a new assertion in economics, which is derived from such concepts as transactions costs, incomplete contracts, discretion, interdependence, and trust. Using game theory this research showed that high job security such as lifetime employment generates a high degree of organizational efficiency in a high-trust culture. Various types of experimental games were undertaken to test methods of improving efficiency.
This research also analyzed the significance of trust in an economy and succeeded in devising a mathematical and economic definition of trust. Starting from the meaning used in daily life, it is expressed in the most general form as probability based on a von Neumann-Morgenstern utility function.
Further, this research investigated upward-sloping wage profiles characterizing the Japanese seniority-wage system. The lifecycle wage model I developed predicts that population ageing will flatten wage profiles. An empirical analysis undertaken in this research demonstrates that this actually happened. In addition, this research performed questionnaire experiments and analyzed people's preferences towards various shapes of wage profiles.
The 1990s is the worst period Japan has ever experienced since the last war, and the worst conditions still persist. Many layoffs have been undertaken, but firms have not yet recovered. A cultural analysis of this research suggests that a simple layoff strategy will not improve the Japanese economy.
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