Wages, overseas investment and ownership: implications for internal labor markets in Japan (original) (raw)

The impact of foreign direct investment on unemployment in Japan

Acta Universitatis Agriculturae et Silviculturae Mendelianae Brunensis, 2014

The flow of foreign direct investment is one of the indicators of economic interconnection with the rest of the world. The paper is aimed at evaluating of inward FDI flows into Japanese economy and unemployment development. For many decades, Japan has attracted considerably lower levels of inward FDI compared to other developed countries of the world. Also the rate of unemployment in Japan was relatively low which is caused by a specific attitude of the active population of Japan towards employment issues. Methods of regression and correlation analysis (including testing the statistical significance) were used in the analysis of FDI and unemployment. The correlation has been approved between FDI and the rate of unemployment.

The Impact of Ownership Structure on Wage Intensity in Japanese Corporations

Journal of Management, 2005

The authors studied the effect of ownership structure on human capital investments as indicated by wage intensity, defined as the ratio of expenditure on employee wages to sales, in a sample of 996 Japanese manufacturing firms during their economic recession of 1998-2002. They found that domestic shareholders, with interests beyond financial considerations, enhance wage intensity, especially when performance is low, and thereby safeguard human capital investments. Foreign shareholders with sole interest in financial returns have an opposite effect; they reduce wage intensity when firm performance is low.

The handmaiden's tale: Japan's foreign investment as a reflection of its domestic economy

International Journal of Business and Globalisation, 2010

One aspect of globalisation has been the changing pattern of foreign investment in East Asia. The evolving pattern reflects both the objectives of potential investors and the constraints imposed by the host governments. Future trends should be heavily influenced by Japanese decisions since Japan will continue to maintain one of the largest economies in the region. Japanese direct foreign investment appears to have greatly redefined itself over the postwar era. However, our analysis demonstrates that the pattern of Japanese overseas investment has been a dependable reflection of its domestic economy as constrained by the political imperatives of the day. The fundamental changes now occurring within the Japanese economy will most likely herald a corresponding departure in the nature of its investment policy.

NBER WORKING PAPER SERIES FDI IN THE RESTRUCTURING OF THE JAPANESE ECONOMY

This paper examines how inward and outward foreign direct investment (FDI) have influenced the restructuring of the Japanese economy and can be expected to continue to do so in the future. We find that outward investment has helped Japanese firms to sustain foreign market shares and contributed to the restructuring of the Japanese economy away from older industries. By shifting from exporting to affiliate production, there has been a geographical reallocation of the activities of Japanese firms, particularly those of multinational manufacturing firms. However, Japanese outward FDI is still not very large relative to the Japanese economy, despite the rapid growth since the mid-1980s, and there is still scope for significant increase when compared with the levels of most other OECD countries. Inward FDI will presumably have an even stronger impact on the restructuring of the Japanese economy. Although the stock of inward foreign direct investment is still very small, there are important changes under way. Deregulation has opened up much of the industrial and service sectors to foreign multinationals.

Foreign-owned versus Domestically-owned Firms: Economic Performance in Japan

Review of Development Economics, 2007

This paper utilizes micro-panel data for firms located in Japan and examines differences in corporate performance between foreign-owned and domestically-owned firms in the 1990s. We find that foreign-owned firms not only reflect superior static characteristics, but also achieve faster growth. Moreover, foreign investors appear to invest in firms that may not be immediately profitable, but those that are potentially the most profitable in the future. There is also no evidence that foreign investor is "foot-loose." These imply that foreign investors bring useful firm-specific assets into the Japanese market, which may work as an effective catalyst for necessary structural reform.

FDI in the Restructuring of the Japanese Economy

2000

This paper examines how inward and outward foreign direct investment (FDI) have influenced the restructuring of the Japanese economy and can be expected to continue to do so in the future. We find that outward investment has helped Japanese firms to sustain foreign market shares and contributed to the restructuring of the Japanese economy away from older industries. By shifting from exporting to affiliate production, there has been a geographical reallocation of the activities of Japanese firms, particularly those of multinational manufacturing firms. However, Japanese outward FDI is still not very large relative to the Japanese economy, despite the rapid growth since the mid-1980s, and there is still scope for significant increase when compared with the levels of most other OECD countries. Inward FDI will presumably have an even stronger impact on the restructuring of the Japanese economy. Although the stock of inward foreign direct investment is still very small, there are important changes under way. Deregulation has opened up much of the industrial and service sectors to foreign multinationals.

Decades not Lost, but Won: Increased Employment, Higher Wages, and More Equal Opportunities in the Japanese Labour Market

Social Science Japan Journal, 2014

We take a fresh analytical look at the developments in the Japanese labour market over the last two decades and provide answers to three key questions: first, was regular employment replaced by non-regular employment on an aggregate level in general and at the expense of younger generations in particular? Second, how do today's labour market outcomes compare to the heydays of the Japanese economy, i.e. to the late 1980s? Third, have wage gaps between men and women as well as between regular and non-regular employees increased, stayed the same, or shrunk? Contrary to both public perception and many research opinions, we find that the Japanese labour market as a whole has produced normatively positive outcomes of an unexpected magnitude in a long-term perspective. By 2010, employment has expanded beyond the structural frame of 1988 both in its non-standard and in its standard segment. We further find that the increase in non-regular employment was predominantly due to an increase in labour demand, mirrored by a significantly narrowed wage gap between non-standard and standard employment. Lastly, we find that women have made substantial inroads into the labour market, both in terms of regular employment and real wage development.

Does it matter where you invest? The impact of foreign direct investments on domestic job creation and destruction (Open Access!!)

The World Economy, 2022

This study examines how foreign direct investment (FDI) affects domestic employment by using unique division-level data of Japanese firms. Contrary to most previous studies focusing on the effect of FDI on net employment growth, we decompose it into job creation (JC) and job destruction (JD) for each individual firm. We find that FDI destination plays an important role: FDI to Asia increases JC, whereas FDI to Europe/North America decreases it; furthermore JD decreases, regardless of FDI destination. A frictional search-and-matching model with heterogeneous jobs can explain the differential effects. The model provides additional predictions on JC and JD by job type, which are also empirically confirmed.