The effect of long working hours on productivity.
～Benefits of lowering the working hours: Do Japanese need to work this hard?～
1200435 Sanako Gokubo
School of Economics management, Kochi University of Technology
Abstract

excess labor demands will continue for a long time,

Japanese are known to have one of the longest working

even if there are temporary fluctuations. In order tohours in the world with some young workers literally

increase economic growth under full employment, it isworking themselves to death. This is causing manynecessary to raise Japan's potential growth byproblems as the people have less and less time for theirincreasing productivity (Morikawa, 2019).

personal lives and are less willing to get married. Thisvicious circle of working and trying to balance

Productivity has been studied by many scholars.

personal life is causing the Japanese population toCollewet (2017) used daily information on working

suffer. This paper examines how population, adult

hours and performance in call center agencies to study

education level, and working hours affect labor

the effect of increasing the working hours in

productivity by comparing G7 countries using a fixed

productivity and found that as the number of hours

effect model. The results revealed that working long

worked increases, the productivity of employee

hours negatively affects productivity, and thatdeclines. Moreover, Inagaki (2013) studied

population and adult education level have a positive

productivity in the healthcare industry using theeffect on productivity. These results also suggest thatdynamic labor data model, his findings show thatpeople will be more productive by reducing working

performance of healthcare workers is particularly

hours and this has a positive influence on the social life

affected by long working hours, indicating that longof Japanese people and the Japanese economy.

working hours lead to a serious loss of productivity.
Furthermore, Lonni (2012) finds that manufacturing

Introduction

productivity does not necessarily increase when hours

In Japan, there is a term for the death of people fromare lengthened in many industries. Also, the flexible

overworking: Karoshi, which can be directly translated

time arrangement has positive effects on enterpriseto “death by overwork.” For instance, 158 people diedperformance.

because of Karoshi, and 2,018 people committed
suicide because of the stress of working in 2019

Previous researchers have studied the influence of(Korosyo, 2019). This unhealthy working life style isworking hours on productivity in different sectors andaccelerating population decline and creating labor

the effect of having flexible working style on

shortages. Despite long working hours in Japan, Japanproductivity. By reviewing previous studies, it can be

has the lowest productivity among G7 countries,

implied that reducing working hours is a focal point ofaccording to data from OECD Compendium of

the economy and social life of employees. This study is

Productivity Indicators in 2018. There is a severe

trying to look at the national level data of the G7

labor shortage in the Japanese economy even thoughcountries and analyze productivity for the years fromthe labor force is constantly under full employment.

1997 to 2018.

With this shortage in the workforce, it is likely that1

Methodology

time not worked because of public holidays, annual

This paper uses secondary panel data from OECD

paid leave, own illness, injury and temporary disability,

statistics (1), which covers the period from 1997 tomaternity leave, parental leave, schooling or training,2018 for the G7 countries; the United States, Canada,slack work for technical or economic reasons, strike or

Germany, France, Italy, the United Kingdom and Japan.

labor dispute, bad weather, compensation leave, andThese regions were chosen because they areother reasons. The data covers employees andconsidered the most industrial countries in the world.

self-employed workers. This indicator is measured inThis paper also explores the effect of working hours,

terms of hours per worker per year. The data are

population, adult education level and productivity,

published with the following health warning: The datausing the fixed effects model, which can be presented

are intended for comparisons of trends over time; theyby the following equation:

are unsuitable for comparisons of the level of averageannual hours of work for a given year, because of

Yit = βo + β1it + β2it + β3it + uit

differences in their sources and method of calculation.

Where:

β2it = population for country i at time t; Population is

Y it = GDP per hour worked for country i at time t;

defined as all nationals present in, or temporarilyGDP per hour worked is a measure of laborabsent from a country, and aliens permanently settled

productivity. It measures how efficiently labor input isin a country. This indicator shows the number of

combined with other factors of production and used inpeople that usually live in an area. Growth rates are thethe production process. Labor input is defined as theannual changes in population resulting from births,

total hours worked of all persons engaged indeaths and net migration during the year. Total

production. Labor productivity only partially reflects

population includes the following: national armed

the productivity of labor in terms of the personal

forces stationed abroad; merchant seamen at sea;capacities of workers or the intensity of their effort.

diplomatic personnel located abroad; civilian aliens

The ratio between the output measure and the labor

resident in the country; displaced persons resident in

input depends to a large degree on the presence and/or

the country. However, it excludes the following:

use of other inputs (e.g. capital, intermediate inputs,

foreign armed forces stationed in the country; foreigntechnical, organizational and efficiency change,

diplomatic personnel located in the country; civilian

economies of scale). This indicator is measured inaliens temporarily in the country. Population

USD (constant prices 2010 and PPPs) and indices.

projections are a common demographic tool. They
provide a basis for other statistical projections, helping

β1it = Hour Worked for country i at time t; Average

governments in their decision making. This indicator isannual hours worked is defined as the total number ofmeasured in terms of annual growth rate and inhours actually worked per year divided by the average

thousands of people.

number of people in employment per year. Actual
hours worked include regular work hours of full-time,

β3it = adult education level for country i at time t;

part-time and part-year workers, paid and unpaid

Adult education level: This indicator looks at adultovertime, hours worked in additional jobs, and exclude

education level as defined by the highest level of2education completed by the 25-64-year-old population.

It was conducted to quantitatively understand how

There are three levels: below upper secondary, upperproductivity is characterized by population, working

secondary and tertiary education. Upper secondary

hours, and adult education level. The first column ineducation typically follows the completion of lower

Table 2 presents the marginal effects of the threesecondary schooling. Lower secondary education

independent variables, using the fixed-effects model.

completes the provision of basic education, usually in a

The second column in Table2 represents the standard

more subject-oriented way and with more specialized

error of the three variables, using the fixed-effects

teachers. The indicator is measured as a percentage ofmodel. In this Table, the P value is 0.01. As thethe same age population; for tertiary and upper

population increases by one million, the GDP increases

secondary, data are also broken down by gender.

by the amount of 0.27 million dollars. As the adulteducation level increases by 1%, 0.29 amount dollars

u it = unobserved characteristics.

increases. As one working hour increases, the GDP
decreases by 0.02 million dollars. Productivity ofResults and Discussion

individuals in Canada, Germany, France, the UnitedTable 1 shows a summary of statistics of the variables

Kingdom and Italy are 30.65, 24.70, 33.76, 26.04,

collected for the years from 1997 to 2018 that is used

37.18 dollars respectively, higher than the productivity

to explore how working hours, population, and adultof individuals in Japan. On the other hand, the labor

education level affects productivity. The averageforce in the USA has lower productivity than the one inproductivity of an individual residing in a G7 country

Japan by -28.10 dollars.

is 48.87 dollars per hour, (productivity can beclassified in dollars) using the purchasing power parity

Table 2 Comparison of productivity based on Japanlaw. The average of population is 102.63 million
people.

Variable
Population
Adult education level
Working hours
CanadaGermany
FranceUnited KingdomItaly
United States

The average of working hours is 1662.79

hours per year and the average adult education level is31.75%. The data is for the time period from 1997 to2018 for G7 countries.

Table 1 Summary of the variables
Variable
Productivity
Population
Working hours
Adult education levelObs126126
126
125

Mean48.87232
102.63071662.794
31.75297

Std. Dev.
6.986888
84.27305
149.5467
11.31412

Min
32.82251
29.90595
1362.78.59318

Max
62.91748
318.857
1873.853.61496

Coef.
0.2787795
0.2900306-0.0245343
30.65994
24.70829
33.76778
26.04415
37.18874-28.10059

Std. Err.
0.0246239
0.0430851
0.0054231
2.465302
2.680053
2.37455
2.26422
1.78123
4.205006

As some prior studies have found, long working hours
lead to a serious loss of the productivity in someIn order to compare productivity, the regression was

sectors such as in call center agencies, healthcare

conducted for G7 countries. The order of regression isservices and the manufacturing industry. Table 2 also

Canada, Germany, France, the United Kingdom, Italy,

suggested that long working hours have a negative

the United States, and the base country is Japan.

effect on productivity. From the results in this paper, it

Table 2 presents the results of the fixed-effects model.

can be concluded that reducing working hours may3

lead to the increase in productivity for Japanese

Korosho Rodo-Hakusyo 2018 329p

workers in companies. This may solve a lot of thelabor and social problems that are related to the low

Productivity: Misconceptions and Realities, Morikawa

productivity problem. Therefore, some policies could

Masayuki, (2018, November)be applied to reduce the working hours. For example,
Microsoft in Japan has reduced the working days toWorking Hours and Productivity. Center for operations

only four days a week. Productivity work drasticallyresearch and econometrics (CORE) Marion Collewet,

increased by about 40% in August 2019. Also, inUniversite Catholique de Louvain. (2017, April)

Finland the prime minister; Marin floated the idea of afour-day week. She believes the country would prosper

Long working hours and loss of productivity in theeven more if the citizens could spend more time withhealthcare industry: Evidence from Japan. Inagaki

their families

Kazuyuki, Onomichi city University (2013, Februaly)

Conclusion

The Effects of Working Time on Productivity and Firm

This paper aimed to reveal the effect of working hours

Performance, Research Synthesis Paper. Lonnie

on productivity with the data from OECD statistics byGolden, ReserchGate (2012, August)using the fixed-effect model. The paper revealed thathours worked could have a negative correlation withMicrosoft Japan tested a four-day work week andproductivity. This means that if Japan decreases theproductivity jumped by 40 %. The Guardian (2020,number of working hours, people will have more timeJanuary)

for their private lives. Therefore, reducing working

https://www.theguardian.com/technology/2019/nov

hours has a potential to solve the problem of the labor/04/microsoft-japan-four-day-work-week-productiv

shortage in Japan.

ityAs discussed in the previous section, there is a trend toFinland’s new prime minister wants her country on adecrease working hours in the world. Sweden tested

four-day workweek. Michelle Cheng, QUARTZ atout six-hour workdays a couple of years ago for 40

WORK (2020, January)

nurses in a hospital, and this led to an increase in

https://qz.com/work/1780373/finlands-prime-minis

productivity. Moreover, the UK’s opposition party

ter-wants-her-country-on-a-four-day-workweek/

floated the idea of introducing a four-day week for theentire country. Such policies could be applied in Japan,

What happened when Sweden tried six-hour working

where the labor market suffers from low productivity.

days ~Participants felt healthier, happier, had more

Overall, this paper could be considered as a guide forenergy and were more productive - so why has the trial

policy makers who can utilize such policies tostopped with no plans to revive it?~ Ben Chapman, The

overcome the barriers that face Japan in the future,

Guardian (2020, January)especially the shortage of labor.

https://www.independent.co.uk/news/business/ne
ws/sweden-six-hour-working-day-what-happenedtrial-a7574126.html

References4Is this the age of the four-say week? ~ Dozens of firms
are trying out shorter working hours – and finding it’s
good for workers, customers and the bottom line~ Robert
Booth, The Guadian (2020, January)https://www.theguardian.com/world/2019/mar/13/age-offour-day-week-workers-productivity

The Productivity of Working Hours. John Pancavel,
Stanford University and IZA (2014, April)Why do the Japanese work long hours? ~Sociological
Perspectives on Long Working Hours in Japan~
Hiroshi Ono, Hitotsubashi University (2018, March)5