Development Bank of Japan
Research Report
No. 10

Job Creation and Job Destruction in Japan, 1978 –1998:
An Empirical Analysis Based on Enterprise Data

September 2000

Economic and Industrial Research Department
Development Bank of Japan

Contents
Summary........................................................................................................................ iii

Introduction .......................................................................................................................... 1
I

Job Creation and Job Destruction ...............................................................................3
1. Concepts and Measurement Issues......................................................................................... 3
2. Data ............................................................................................................................................. 6
3. Job Creation and Job Destruction Trends............................................................................. 7
4. Employment Change Decision Model.................................................................................17II

Observations Regarding Factors Behind the Spread of Temporary
Employment .............................................................................................................. 23
1. Motivation and Data ...............................................................................................................23
2. Creation and Destruction of Temporary Employment .....................................................24
3. Investigation of the Substitution of Full-time Employment with
Temporary Employment........................................................................................................26

Conclusion ........................................................................................................................ 31
Appendix ........................................................................................................................ 33
1. Sample Bias...............................................................................................................................33
2. The Job Destruction Rate Taking Business Bankruptcies andShutdowns into Account........................................................................................................34
References ........................................................................................................................ 37

Development Bank of Japan Research Report/ No. 10iJob Creation and Job Destruction in Japan, 1978 – 1998
An Empirical Analysis Based on Enterprise Data

Summary
1. The low-level unemployment rate once boasted of by Japan rose to 5% through the doubledip recession that has hit Japan following the collapse of Japan’s bubble economy. Despite thefact that the immediate momentum of the rise has waned, Japan’s employment situation remains
severe. During 1998 and 1999, the country witnessed the unprecedented phenomenon of adecline in the number of individuals employed. This did not mean that firms en masse reduced thenumber of jobs, for some firms increased the size of their work force. Moreover, in the current
debate swirling around employment policies there is a concern not merely about curbing
unemployment – interest in creation of job opportunities has increased, and the need for ananalysis of job creation at the firms that represent the demand side for labor has grown. This
report probes the principal factors that effect job creation and job destruction, using enterpriselevel data that forms the core of management decision-making.
2. Throughout Japan there are both firms that create jobs and firms that eliminate jobs, but
because employment statistics are published on an aggregate basis it is only possible to grasp the
net increase or decrease in employment. It is possible to observe the gross job creation and job
destruction occurring “behind the scenes”, so to speak, by tracing the statistics backwards toindividual firms. We divided the increase in employees at firms that expanded employment andthe decrease in employees at firms that reduced employment, respectively, by the total number of
employees at the beginning of designated time periods for all firms, to create values we defined as
the “Job Creation Rate” and the “Job Destruction Rate”. We calculated these rates for listed andpublicly traded companies for the past 20-year period. Both the Job Creation Rate and the Job
Destruction Rate for all listed and publicly traded companies hovered at approximately 2%during the 1980s. During the bubble era, however, the Job Creation Rate leapt to the 3% level,
while the Job Destruction Rate fell below 1%. Since the collapse of the bubble economy,
however, the Job Creation Rate has declined to about the 1% level and the Job Destruction Ratehas risen to more than 3%, causing a reversal to a net decline in employment.
3. Looking at the Job Creation Rate and the Job Destruction Rate by industrial sector, until the
beginning of the 1990s the Job Creation Rate in the services, wholesale and retail, and machineryindustries such as electric machinery was high, which pushed up overall employment. During the
bubble era, the Job Creation Rate in the construction sector and manufacturing sectors except
machinery also jumped, but after the collapse of the bubble economy the Job Creation Rate fellin every industrial sector and the Job Destruction Rate also rose. Amidst these changes the Job
Creation Rate for sectors such as services and wholesale and retail has been over 1%.
Looked at by firm size, the smaller the enterprises the higher the Job Creation Rate. The Job
Destruction Rate at small firms was also high at the start of the 1980s. Since then, however, theDevelopment Bank of Japan Research Report/ No. 10iiiJob Destruction Rate at large firms has increased relatively, and in the latter half of the 1990s the
Job Destruction Rate has been highest at large firms employing more than 5,000 individuals.
When examined by company age, the tendency is for younger firms to have a higher Job Creation
Rate and lower Job Destruction Rate. Looked at by the average age of company employees, ingeneral the Job Creation Rate is high and the Job Destruction Rate is low when the average ageof employees is low. While we were unable to confirm whether there is a relationship between
the average wages of employees and the Job Creation Rate and Job Destruction Rate, there is atendency for the Job Creation Rate to be higher to the extent the average wage is low.
Overall the Job Creation Rate rose and Job Destruction Rate fell during the bubble era,
regardless of the size of the firm, the age of the company or the average age or average wages of
employees. This singular characteristic of the bubble era was especially evident in longestablished firms or firms where the average employee age was high, and the lack of labor force
demand in these firms after the collapse of the bubble economy is remarkable.
4. When the principal causes of employment changes are analyzed on an individual firm basis
using estimates based on enterprise data from listed and publicly traded companies, revenue
growth is found to have a meaningful positive value and business expansion forms an importantfactor in job growth. The average age of workers and the company age also generally show
meaningful negative values, and we found that firms where the burden of personnel expenses hasgrown because the workforce has aged, or well-established companies with low growth, arecompanies that had to retrench on employment. Moreover, during the 1990s the debt ratio
showed a meaningful negative value, and we believe that a firm’s financial condition has
increased in importance concerning decisions regarding employment.
5. We next investigated whether there is a move on the part of listed and publicly traded
companies to substitute regular employment with low-cost, highly flexible temporary
employment when employees leave because of retirement age or layoffs. The following results
were attained.
When looked at by number of employees, in many cases temporary employment is being
creating at enterprises where regular employment is growing and the number of firms
substituting regular employment with temporary employment is not very large. Looked at bynumber of enterprises, however, a move to substitute temporary employment is plainly evident,
and more than half of all firms that have been increasing temporary employment since the later
half of the 1990s have been reducing regular employment. This move towards substitution can bereadily seen in firms where the average age of employees is high or at firms where the average
wage level is high.
6. The above shows that the factors influencing job creation include expansion of a firm’s
business activity, company financial health, comparatively small size, the number of years since
the company was founded and the average age of the company’s work force. In order to improve
the Job Creation Rate, therefore, it will be important to cultivate young firms that possess strong
growth potential, promote the commercialization of creative and unique ideas through measures
such as deregulation, or create an environment that promotes new business start-up activity.

iv

Development Bank of Japan Research Report / No. 10

This research concerned calculation of the Job Creation Rate and Job Destruction Rate from1978 through 1998, using microdata from listed and publicly traded Japanese companies, and an
examination of the factors that influence changes in employment. In addition we also
investigated whether there is a move by listed and publicly traded companies to substitute regular
employment with temporary employment, which is more advantageous for firms from thestandpoint of low cost and high flexibility, when employees leave because of retirement age orlayoffs.
Introduction
It has frequently been said that Japan has a stable, low level of unemployment, but this common
knowledge has continued to crumble through the double-dip recession that has hit Japan since
the collapse of the bubble economy. After Japan’s the unemployment rate rose to 2% in 1976 in
the wake of the first oil shock, the rate remained at the 2% level for approximately 20 years until
the first half of the 1990s. This does not suggest that there were no changes to theunemployment rate during that entire 20-year period. Although the unemployment rate rose
gradually from about 1980, reaching 2.9% (annual average, all figures cited below are the same) in
1987 and briefly even reaching 3%, during the bubble years the unemployment rate reflected theshortage of workers and began to fall, declining to 2.1% in 1990. Following the collapse of the
bubble economy, however, the unemployment rate began to climb once again, reaching 3.2% in1995 and eventually remaining at the 3% level. Once the 3% level was breached, the rise in theunemployment rate became remarkably rapid. The second recession following the collapse of the
bubble economy since the spring of 1997 ranks with the first oil shock in severity and has had atremendous impact on the labor market. The unemployment rate in 1998 was 4.1%, meaning thatafter reaching the 3% level in 1995 the rate climbed above 4% in just 3 years, leapt to 4.7% in1999 and stands today at 5%.
Behind the rapid rise in the unemployment rate lies the unprecedented phenomenon
witnessed during 1998 and 1999of a decline in the number of individuals employed. This was notseen even during the recession after the first oil shock. This does not mean that firms en masse
reduced the number of their employees, for some firms increased the size of their work force.
Faced with the current severe employment situation, therefore, it is particularly important toprobe the characteristics of firms that either increased or decreased employment. Moreover, inthe current debate swirling around employment policies it is not merely a question of groping formeasures to maintain employment and curb unemployment – interest has grown in the moreaggressive theme of creating job opportunities. The need for an analysis of job creation at thefirms that represent the demand side for labor has therefore grown. This report probes theprincipal factors that effect job creation and job destruction, using the enterprise-level data that
forms the core of management decision-making.
This report is organized into two chapters. In chapter I, indicators referred to as the “Job
Creation Rate” and the “Job Destruction Rate” are used to examine the characteristics of firmsthat increased or destroyed employment opportunities during the period from 1978 through 1998,
based on data for listed and publicly traded firms. Chapter I also considers the factors that
influence a firm’s decision-making regarding increases and decreases in employment, using asimple change in employment decision model.
In chapter II we turn our attention to the trend for temporary employment, which is
showing remarkable growth. Principal factors on the labor supply side, such as the increase inneed for part-time or second jobs by married women participating in the labor force or younger
workers, have long been regarded as important causes for the rise in temporary employment.
Development Bank of Japan Research Report/ No. 10

1Since about 1998, however, factors on the demand side for labor have begun to grow inimportance, pointing to the possibility that attractive choices such as lower cost and higher
flexibility than with regular employees are growing stronger for firms. The purpose of thischapter is to use enterprise data to investigate whether there is indeed a movement to substituteregular employment with temporary employment.
Finally, in the conclusion we take the above analysis into consideration to touch upon someideas for countermeasures designed to reinvigorate job creation.

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Development Bank of Japan Research Report/ No. 10

I Job Creation and Job Destruction
1. Concepts and Measurment Issues
Throughout Japan there are both firms that can create jobs and firms that eliminate jobs, but
because employment statistics are published on an aggregate basis it is only possible to grasp the
net increase or decrease in employment. It is possible to observe the gross job creation and job
destruction occurring “behind the scenes”, so to speak, by tracing the statistics backwards toindividual firms.
Research concerning job creation and job destruction based upon data at the level of theindividual enterprise or business establishment was first vigorously addressed in Europe and the
U.S. at the end of the 1980s. The work that played a trailblazing role in this effort was theresearch on job creation and job destruction in the U.S. manufacturing industry conducted byDunne, Roberts and Samuelson (1989). Davis and Haltiwanger (1992) and Davis, Haltiwanger
and Schuh (1993) also conducted similar research, which verified that while the change in
employment may not appear great when viewed on a net basis, behind the aggregate totals thedifferences in job creation and job destruction were different by orders of magnitude. All of theresearch indicated above was based upon the database that contains data on individual businessestablishments in the U.S. called the Longitudinal Research Database (LRD).
Examples of representative research carried out in Japan include Genda (1997, 1998) and
Higuchi and Shimpo (1998a). For this pioneering research, the researchers conducted empiricalanalysis of job creation and job destruction based upon separate data for business establishmentsfrom the Ministry of Labor’s the Employment Trend Survey. Research regarding Japan’s
manufacturing industry includes work such as Morikawa and Tachibanaki (1997), based upon theseparate tables in the Census of Manufactures put out by the Ministry of International Trade andIndustry (MITI) 1.
The OECD (1996) carried out comparative research on job creation and job destruction during
this same period for the 18 member countries of the OECD, which showed that compared toother advanced nations, job creation is low in Japan. Table 1-1 shows a data excerpt taken fromthat study for six leading nations.
The research for this paper was modeled on the research methods of Davis, Haltiwanger and
Schuh (1996) or Genda (1997, 1998) and Higuchi and Shimpo (1998a). The terminology used forthe analysis and the indicators are defined below. All Japanese enterprises were classified into agroup of firms that increased employment and a group of firms that decreased employment. The
total increase in employment of the group of enterprises that increased employment is referred to
as “job creation” and the total decrease in employment of the group of enterprises that decreased
employment is referred to as “job destruction”. The job creation figures in Period t may include
cases of employment increased during Period t by firms that already existed at the end of Periodt-1, and cases of employment created by firms that were newly established or started doing
business during Period t. Similarly, the job destruction figures in Period t may include cases of
employment being reduced during Period t by firms that already existed at the end of Period t-1,
and cases of employment being reduced by firms that went bankrupt, were dissolved orotherwise stopped doing business during Period t. Because an analysis of newly-established firms
1

In addition to the empirical research on job creation and job destruction based upon microdata that is introduced in this paper,
other examples are the research by Higuchi and Shimpo (1998b) using the separate tables from MITI’s Basic Survey of JapaneseBusiness Structure and Activities and the analysis conducted by the Kansai University Institute of Economic and Political Studies(1989) on a business establishment-basis covering 90 manufacturing companies using each company’s marketable securities
reports. The results of research conducted to-date are compiled in detail in Kiyota and Kimura (1999).
Development Bank of Japan Research Report/ No. 10

3

or bankrupt or closed firms is difficult because of the quality and limitations of the data, for thisstudy we used only the job creation or job destruction figures of firms that remained in businessover the term analyzed. For reference a conceptual illustration of this selection is shown in Figure
1-1.
We defined the Job Creation Rate, or JCR, as the total increase in the number of employedindividuals in the enterprise group that increased employees in Period t (job creation) divided by
the total number of individuals employed by all firms at the start of Period t. We defined Job
Destruction rate, or JDR, as the total decrease in the number of employed individuals in theenterprise group that decreased employees in Period t (job destruction) divided by the total
number of individuals employed by all firms at the start of Period t. Subtracting the Job
Destruction Rate from the Job Creation Rate gives a rate of employment increase or decreasethat can be confirmed even using statistics on an aggregate basis, which we called theemployment Net Creation Rate, or NCR. Combining both rates provides the Job Reallocation
Rate, or JRR, which is one indicator that shows the size of labor force movement.
Table 1-1. Job Creation and Job Destruction in Individual Countries
Period (Years)
Job Creation Rate
Firm start-ups
Employment increase at existing firms
Job Destruction Rate
Firm shutdowns
Employment decrease at existing firms
Net Creation Rate
All locations
Job Reallocation Rate
Existing locations onlyJapan
91 – 94
7.4
4.0
3.4
7.9
3.3
4.6
-0.5
15.3
8.0

U.S.
84 – 91
13.0
8.4
4.6
10.4
7.3
3.1
2.6
23.4
7.7

Germany
83 – 90
9.0
2.5
6.5
7.5
1.9
5.6
1.5
16.5
12.1

France84 – 91
12.7
6.1
6.6
11.8
5.5
6.3
0.9
24.4
12.9

Canada83 – 91
14.5
3.2
11.2
11.9
3.1
8.8
2.6
26.3
20.0

(Unit: %)England85 – 91
8.7
2.7
6.0
6.6
3.9
2.7
2.1
15.3
8.7

Notes: 1. Excerpted from OECD (1996), Higuchi and Shimpo (1998a)
2. Figures for Japan are from Higuchi and Shimpo (1998a); all other figures are from OECD (1996).
3. Data are not comparable on a unit basis because the data for Japan, the U.S., France and Germany were calculatedusing business establishment-level data, while the data for Canada and England were calculated from enterprise-level
data.
4. Annual average ratios for the respective years shown.

Figure 1-1. Conceptual View of Job Creation and Job Destruction
Expansion of
employment by newfirms
Job creation
Expansion of
employment by existingfirms

Job destruction

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Development Bank of Japan Research Report/ No. 10

Contraction of
employment byexisting firms
Contraction of
employment because ofbankruptcy, shutdowns,
etc.

Subject of this reportDefinition of terminology◯ Job Creation

Total increase in employment in the group of firms that increased employees in Period t◯ Job Destruction

Total decrease in employment in the group of firms that decreased employees in Period t◯ Job Reallocation

Job Creation + Job Destruction◯ Net Creation

Job Creation – Job Destruction

Definition of indices◯ Job Creation Rate, JCR
Total increase in the number of employed individuals in the group of firms that increased
employees in Period t, divided by the total number of individuals employed by all firms at thestart of Period t (end of Period t – 1)

å( N - N
JCR =
å
1

t

+

N

t -1

)

t -1

(Nt: number of employees at
each firm at the end of Period t)◯ Job Destruction Rate, JDR
Total decrease in the number of employed individuals in the group of firms that decreased
employees in Period t, divided by the total number of individuals employed by all firms at thestart of Period t

JCR 1 =- å ( N t - N t -1 )
-

å

N

t -1

◯ Net Creation Rate, NCR

NCR = JCR – JDR◯ Job Reallocation Rate, JRR

JRR = JCR + JDRDevelopment Bank of Japan Research Report/ No. 10

52. Data
This study covered all listed companies on the First and Second Sections of the Tokyo Stock
Exchange, the Osaka Stock Exchange and the Nagoya Stock Exchange, and listed companies on
all local stock exchanges, and all over-the-counter companies. The Fiscal 1998 sample number
using micodata on an individual firm basis 2 was approximately 3,200 firms.
In previous research such as that of Genda (1997, 1998) and Higuchi and Shimpo (1998a),
the data utilized was mainly business establishment data from the Employment Trend Survey. It is
possible to also use business establishment data rather than data for firms to total job creationand job destruction. When the objective is not only to create this sort of numerical total but also
to understand the principal causes of the employment increase, however, it is preferable to use
the data from the firms that form management decision-making entities. Because we used datafrom marketable securities reports, for the analysis for this report we were able to include
information on employee attributes such as average age or wages, and information on factors that
influence decisions by firms to change employment, such as revenues or profit performance or
corporate finances.
There are also some weaknesses, however, that arise from using a sample that is limited toonly listed and publicly traded companies. This is the problem of so-called sample bias 3. The
Employment Trend Survey that was used by Genda (1997, 1998) and Higuchi and Shimpo (1998a)covers approximately 14,000 business establishments that were randomly selected from all private,public and national government offices that employ five or more full-time regular workers. On
the other hand, in addition to being comparatively large in size, many of the listed and publicly
traded firms that were the focus of the analysis for this report are characterized as top firms thathave met the strict criteria for being listed and publicly traded as well as being top performers interms of operating results and financial position 4. Accordingly, careful attention must be taken
when attempting to apply and interpret the results of the analysis presented in this paper to all
Japanese firms.
Furthermore, in order to ensure an adequate sample number, we used individual firm
accounting rather than consolidated accounting. When preparing the analysis we normalized theoriginal data listed in each firms’ marketable securities information report as follows.

Also contains some firms immediately before they were listed and publicly traded on a stock exchange. Also includes firms thatwere listed on the Hiroshima Stock Exchange and the Niigata Stock Exchange, which were merged into the Tokyo Stock
Exchange in March 2000.
3 In addition to sample bias, there is also a problem because the survey was limited to an analysis of on-going concerns and did
not include an analysis of jobs created when new companies were established or jobs lost because of bankruptcies or businesses
being abandoned. To analyze job creation at newly-established firms or the job destruction that accompanies actions such as
business shutdowns or cessation of business lines, a separate analysis based on the Establishment and Enterprise Census and theEstablishment Directory Maintenance Survey from the Management and Coordination Agency, such as that by Higuchi and Shimpo(1998a) or Genda (1999) is required.
4 For specific details refer to Appendix Commentary 1.
2

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Development Bank of Japan Research Report/ No. 10

Data normalization method
1. We defined each fiscal year to be from April through March of the following year; we madethe firm’s fiscal year-end numbers within this period the data for the fiscal year in question.
2. For firms with two or more settlement periods in a fiscal year, we used the accounting
period with the most months. For the outstanding balance at that time we took the end-ofperiod value for the settlement used, and converted the flow value to 12 months.
3. When two listed companies merged, as a general rule, after the merger we totaled both
firms using only the pre-merger data of the comparison firms 5.

Basically the company data used for the report is from the Development Bank of Japan’s
company finance databank. Because this database does not have data on the finance andinsurance industries, however, for these industries we used data obtained from each company’smarketable securities reports and the Corporate Quarterly Handbook published by Toyo Keizai,
Inc. 6
Before moving to the empirical analysis, an additional word of caution is warranted
concerning the data concerning employees that form the nucleus of this paper’s analysis. In
addition to information on end-of-period employees, the Development Bank of Japan’s company
finance databank also contains data on “temporary, part-time and other employees otherwise notincluded in end-of-period employees”. For this paper we regarded end-of-period employees asregular employees, and treated temporary, part-time and other employees otherwise not included
in end-of-period employees as temporary employees. In the database before Fiscal 1976, however,
the information on temporary, part-time and other employees otherwise not included in end-ofperiod employees was recorded in the end-of-period employee headcount, so a discontinuity
occurs from that year. Accordingly, we set the period for the analysis for the years when the data
is usable from Fiscal 1978 until Fiscal 1998 7.
The empirical analysis regarding job creation and job destruction of regular employment is
discussed in Chapter I. As a convenience, regular employee is referred to simply as “employee”.
3. Job Creation and Job Destruction Trends
3.1. Overall Trend
Using the analytical method described above, we calculated the Job Creation Rate, the Job
Destruction Rate, the Net Creation Rate and the Job Reallocation Rate. The results are shown in
Table 1-2 8.
Both the Job Creation Rate and the Job Destruction Rate hovered at approximately 2%during the 1980s. During the bubble era, however, the Job Creation Rate leapt upward, while theFor mergers involving a sales subsidiary where a simple summation was believed to not be appropriate, however, we did not
sum the numbers. In addition, we made no adjustments for mergers with firms that were not listed and publicly traded or forchanges such as business spin-offs or separations into several firms.
6 For all data except for finance and insurance, for the years in which each firm was established we also supplemented the datausing each firm’s respective marketable securities report and the Corporate Quarterly Handbook published by Toyo Keizai, Inc.
7 Because the number of employees at the end of the prior fiscal year is required in order to calculate the Job Creation Rate and
Job Destruction Rate, the period for the analysis was begun in Fiscal 1978.
8 As explained in Note 3, for listed and publicly traded firms it is difficult to analyze job creation by newly established firms or job
destruction as a result of bankruptcies, shutdowns, etc. We did complete an analysis of job destruction resulting frombankruptcies, shutdowns, etc., however, based upon the premises outlined in Appendix Note 2.
5

Development Bank of Japan Research Report/ No. 10

7

Job Destruction Rate declined substantially. In both Fiscal 1990 and 1991 the Job Creation Ratereached 3.1%, respectively, while the Job Destruction Rate in both Fiscal 1990 and 1991 was
0.7%. This situation changed after Fiscal 1992, however, as the Job Creation Rate declined as the
Job Destruction Rate rose, and both rates reversed their direction in Fiscal 1993. In Fiscal 1998,
the Job Destruction Rate climbed to 3.3% and exceeded the Job Creation Rate by more than 1%.
Turning to the Net Creation Rate and the Job Reallocation Rate, in Fiscal 1990 the Net
Creation Rate – the difference between the Job Creation Rate and the Job Destruction Rate –climbed to 2.5% as the result of the increase in the Job Creation rate and the decline in the Job
Destruction Rate during the bubble years. In Fiscal 1993, however, following the burst of the
bubble, the Job Destruction Rate exceeded the Job Creation rate and the Net Creation Rate
turned negative. The rate remained negative for the next six years, through Fiscal 1998. On theother hand, the Job Reallocation Rate – the sum of the Job Creation Rate and the Job
Destruction Rate – has gradually increased during the past 20-year period, and looked at fromthis indicator only there has been a gradual expansion of labor movement 9.
Next we turned our attention to the number of firms and looked at the percentage of firmsthat increased jobs (Job Creation Firms) and the percentage of firms that decreased jobs (Job
Destruction Firms) as a share of all companies. When we compare these movements to thechanges in the Job Creation Rate and the Job Destruction Rate, respectively, we can discern no
obvious discrepancies and both percentages show consistent movement. Until Fiscal 1988 thepercentage for the Job Creation Firms moved almost entirely with a range of 40 – 60%. In Fiscal
1989, however, the percentage rose above 60%, which until then had been an upper limit, andreached 69.7% in Fiscal 1991. Following the collapse of the bubble economy, however, thisphenomenon reversed itself in Fiscal 1994 and dropped below the old lower limit of 40%, as theranks of firms that reduced employment swelled. Job Creation Firms represented 32.5% of allcompanies in Fiscal 1998.
The above analysis confirmed the gross job creation and job destruction behind the netchange in employment by using the actual data. Although the Net Creation Rate during the
bubble years was between 2% to 3%, this did not mean that all firms were in fact increasing jobs
together, for about one-quarter of all firms were reducing jobs and the Job Destruction Rate fell
below 0.7%. In the mirror situation, although the Net Creation Rate was negative during theyears from Fiscal 1993 onward, approximately 30% of all firms were increasing the number ofjobs and the Job Creation Rate was also maintained at the 1% level. So we can see, from themicrodata for individual firms before it is aggregated, many important facts which otherwise
would be overlooked by using the aggregated data only 10.

Although the Job Reallocation rate is used as an indicator showing the size of labor force movement, the Job Reallocation Rae isthe simple sum of the Job Creation Rate and the Job Destruction Rate and is not a proper indicator showing the size of jobchanges.
10 When we compare the Job Creation Rate and Job Destruction Rate for listed and publicly traded firms calculated for this reportwith the results from Higuchi and Shimpo (1998a) which are shown in Table 1-1, both the Job Creation Rate and the Job
Destruction Rate from the results in this report appear to be fairly small. Because the Job Creation Rate and Job Destruction
Rate for Japan from Higuchi and Shimpo (1998a) was calculated from data for business establishments, we cannot make asimple comparison with the results of this study, which were calculated for firms. This points to the possibility of sample bias
inherent in the data as one factor behind this discrepancy, because this report covered only listed and publicly traded firms.
Moreover, because the data from Higuchi and Shimpo (1998a) were totaled at the business establishment level, they are thought
to be effected by job transfers in and out of positions among business establishments of a single firm. In Genda (1998), theinfluence of job transfers in and out of positions among business establishments at the same firm are too large to be ignored.
98Development Bank of Japan Research Report/ No. 10

Table 1-2. Job Creation Rate, Job Destruction Rate, Net Creation Rate, Job
Reallocation Rate and Percentage of Firms That Increased and Decreased Jobs
(Unit: %)Fiscal Year

Job Creation
Rate

Job Destruction
Rate

Net Creation
Rate

Job Reallocation
Rate

Percentage of firmsthat increased jobs

Percentage of firmsthat decreased jobs

1978
79
80
81
82
83
84
85
86
87
88
89
90
91
92
93
94
95
96
97
98

1.1
1.1
1.9
2.3
2.5
1.7
1.7
1.9
1.8
1.4
1.5
2.5
3.1
3.1
2.5
1.3
0.9
0.7
0.8
1.0
1.0

3.3
2.1
1.2
1.1
1.2
1.9
1.8
1.6
2.4
2.5
1.8
1.6
0.7
0.7
1.2
2.0
2.8
3.2
3.0
3.4
3.3

-2.2
-1.0
0.6
1.2
1.3
-0.3
-0.2
0.3
-0.5
-1.1
-0.3
1.0
2.5
2.4
1.3
-0.6
-1.9
-2.5
-2.2
-2.4
-2.2

4.5
3.2
3.1
3.3
3.7
3.6
3.5
3.4
4.2
3.8
3.4
4.1
3.8
3.8
3.7
3.3
3.7
3.9
3.8
4.3
4.3

34.0
39.6
52.1
56.2
50.9
40.7
41.8
46.7
47.4
43.9
44.9
61.2
68.7
69.7
64.9
48.4
35.6
28.0
29.3
34.0
32.5

63.9
57.8
45.4
41.0
46.4
56.8
55.7
50.1
48.5
53.4
45.0
31.1
24.8
24.2
32.5
46.7
58.6
65.4
64.4
64.0
65.5

Note:

Because some firms did not change the number of their employees the percentage of firms that increased employment and thepercentage of firms that decreased employment do not always total 100% when added. This holds true for all of the following tables as
well.

3.2. Trend by Industry
For the analysis that follows we divided the past 20-year period into four time periods covering
Fiscal 1978-1983, Fiscal 1983-1988, Fiscal 1988-1993 and Fiscal 1993-1998 and calculated the Job
Creation Rate and Job Destruction Rate (annual average, all following figures are the same) for
each respective period.
Let us begin by classifying industries into 11 industrial sectors including four manufacturingclassifications and seven non-manufacturing classifications. Table 1-3 shows the Job Creation
Rate, Job Destruction Rate and Net Creation Rte according to this industrial sector scheme.
While the Job Destruction Rate has a positive value based upon the original definition, forconvenience sake we made them coded numbers and have shown the values as negative values.
The two periods for Fiscal 1978-1983 and Fiscal 1983-1988 share many points in common.
Classifications that had high Job Creation Rates during these two time periods were the electricmachinery industry and other machinery among the manufacturing industries, and sectors such as
wholesale and retail, transportation and telecommunications, finance and insurance and services.
These sectors pushed total employment upward. On the other hand, industries with a high Job
Destruction Rate were materials-type manufacturing and other non-manufacturing industries thatare represented by fishing and mining industries.
During the period for Fiscal 1988-1993, which included the bubble economy years, the Job
Creation Rates in 10 of the 11 industrial sectors rose higher than during Fiscal 1983-1988, while
the Job Destruction Rate shrank in eight sectors, and a rise in overall employment was seen. This
was not only in the machinery industry or the wholesale and retail or services sectors that until

Development Bank of Japan Research Report/ No. 10

9this time had lifted employment. Industries such as materials-type manufacturing industries orconstruction, which had been experiencing a net decline in employment, also saw a leap in the
Job Creation Rate, which caused the Job Destruction Rate to decline sharply.
In the period covering Fiscal 1993-1998 following the collapse of the bubble economy thesituation reversed and all 11 sectors saw the Job Creation Rate fall below the level of Fiscal 19881993, while the Job Destruction Rates expanded. As a result a net decrease in employment wasseen in all sectors with the exception of services. One’s attention is caught by the fact that evenunder these severe employment conditions the service sector and the wholesale and retail sector
managed to maintain Job Creation Rates that exceeded 1.0%.
Table 1-3. Job Creation Rates and Job Description Rate by Industrial Sector

Non-manufacturing

Manufacturing

Fiscal 1978-1983
Materials
Electric machinery
Other machinery
Other processing and assembly industries
Construction
Wholesale and retailTransportation and telecommunications
Gas and electric power
Finance and insurance
Services
Other non-manufacturing

Job Creation Rate
0.6
2.6
1.8
0.8
1.3
1.4
1.1
0.5
2.0
1.7
0.8

Job Destruction Rate
1.9
0.3
0.9
1.5
0.4
1.1
1.6
0.1
0.5
0.1
5.4

(Unit: %)Net Creation Rate
-1.3
2.3
0.8
-0.7
0.9
0.3
-0.5
0.4
1.5
1.6
-4.7

Job Creation Rate
0.7
1.6
1.4
1.3
0.8
1.8
1.9
0.3
1.0
2.8
1.2

Job Destruction Rate
2.4
0.3
2.2
1.3
1.1
1.4
1.7
0.4
1.5
1.2
3.1

(Unit: %)Net Creation Rate
-1.7
1.3
-0.8
-0.0
-0.3
0.4
0.2
-0.0
-0.6
1.5
-1.9

Job Creation Rate
1.5
2.2
1.9
2.9
3.3
2.9
1.4
0.8
1.5
3.8
1.8

Job Destruction Rate
1.4
0.5
0.3
0.4
0.0
0.5
2.3
0.1
0.3
0.3
3.3

(Unit: %)Net Creation Rate
0.1
1.7
1.5
2.4
3.3
2.4
-0.9
0.7
1.2
3.5
-1.5

Non-manufacturing

Manufacturing

Fiscal 1983-1988
Materials
Electric machinery
Other machinery
Other processing and assembly industries
Construction
Wholesale and retailTransportation and telecommunications
Gas and electric power
Finance and insurance
Services
Other non-manufacturingNon-manufacturing

Manufacturing

Fiscal 1988-1993
Materials
Electric machinery
Other machinery
Other processing and assembly industries
Construction
Wholesale and retailTransportation and telecommunications
Gas and electric power
Finance and insurance
Services
Other non-manufacturing

10 Development Bank of Japan Research Report/ No. 10

Non-manufacturing

Manufacturing

Fiscal 1993-1998
Materials
Electric machinery
Other machinery
Other processing and assembly industries
Construction
Wholesale and retailTransportation and telecommunications
Gas and electric power
Finance and insurance
Services
Other non-manufacturing

Job Creation Rate
0.2
0.2
0.3
0.5
0.5
1.3
0.8
0.3
0.3
2.1
1.6

Job Destruction Rate
4.0
2.7
2.3
2.5
1.9
3.3
3.6
0.3
2.9
2.0
3.9

(Unit: %)Net Creation Rate
-3.9
-2.5
-2.0
-2.0
-1.4
-2.0
-2.8
-0.1
-2.6
0.1
-2.3

Notes: 1. Although the sign for the Job Destruction Rate is negative ( – ), for convenience sake the figures in this report are
shown as positive numbers.
2. Each firm is classified according to its principal business. “Materials-type industries” refers to paper and pulp, cement,
ceramics and glass, textiles, chemicals, iron and steel and non-ferrous metals. “Other machinery” includes generalmachinery, transportation machinery, and precision machinery. “Other processing and assembly industries” are foodand beverages, petroleum, metal products, rubber products, plastic products, wool products, etc. “Other nonmanufacturing includes sectors such as mining, fishing and real estate.
3. Annual average value.

Development Bank of Japan Research Report/ No. 10

11

3.3. Trend by Size of Firm
Next we observed the trend by size of firm, based upon the number of employees, classified into
five levels (1-299 employees, 300-499 employees, 500-999 employees, 1,000-4,999 employees,
and 5,000 or more employees) using the number of employees at the end of the first fiscal year ofeach period. Table 1-4 shows the Job Creation Rate, Job Destruction Rate and other statistics inaccordance with the above classification.
We can confirm the tendency for the Job Creation Rate to be high to the extent firm size issmall. The Job Destruction Rate as well, which was high for comparatively small firms with 1-299
employees or 300-499 employees until the Fiscal 1983-1988 time period, rose relatively for large
firms from Fiscal year 1988-1993, and the tendency for the rate to be high for small-scale firms
gradually became less distinct. In the Fiscal 1993-1998 time period, the Job Destruction Rate oflarge-scale firms of 5,000 or more employees was the highest among the five categories, a trendthat until now was impossible to verify 11.
Table 1-4. Trend by Size of Firm (Classified into 5 Levels by Number of Employees)
Fiscal year

Job Creation Rate

Job Destruction
Rate

Net Creation Rate

Percentage of firmsthat increases jobs

78-83
83.88
88-93
93-98
78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98

1-299
employees
2.5
1.7
3.2
2.5
2.0
2.2
1.1
2.4
0.5
-0.6
2.1
0.1
42.8
45.2
63.2
36.8

300-499
employees
1.5
1.6
3.3
1.3
2.1
2.2
0.8
2.3
-0.6
-0.6
2.5
-1.0
33.6
45.1
65.7
33.0

500-999
employees
1.7
1.9
2.8
1.3
1.4
1.4
0.6
2.4
0.3
0.5
2.3
-1.2
46.6
48.8
73.4
31.3

1000-4999
employees
1.7
1.2
2.3
0.6
1.1
1.4
0.5
2.7
0.5
-0.2
1.8
-2.2
52.3
44.9
72.9
20.7

5000 or more
employees
1.2
1.2
1.7
0.3
0.9
1.7
0.9
3.0
0.3
-0.5
0.7
-2.7
48.5
44.9
77.1
12.6

Notes: 1. Classified into 5 levels by number of employees at end of the first fiscal year of each time period.
2. Annual average value for Job Creation Rate, Job Destruction Rate and Net Creation Rate.

11 Genda (1999) also carried out an analysis by number of employees using the business establishment data until 1995 in the

Employment Trend Survey. The Job Creation Rate is consistent with the results of this report. But a result showing the Job
Destruction Rate to be higher to the extent firms are small was derived, with this tendency growing weaker after the Fiscal
1983-1988 time period, which is at odds with the results of this paper. The fact that the sample size for small firms for thisreport is extremely small because the sample was restricted to listed and publicly traded firms is surmised to be the principal
cause of this discrepancy. But the difference in the time frames of the respective studies should be noted as well. For this report
we used data until Fiscal 1998, which confirmed that the rise in the Job Destruction Rate at large-scale firms until 1998 wasremarkably large. This points to the possibility that this type of movement in the final year is weakening the tendency for the Job
Destruction Rate to be high the smaller the firm, as seen in the past. Furthermore, it is also necessary to separately consider theeffect of changes clearly visible at large-scale firms, such as transfers of employees to subsidiaries or affiliated companies or the
spin-off of operating divisions.
12 Development Bank of Japan Research Report/ No. 10

3.4. Trend by Age of Company
We defined “company age” as the number of years that had passed since a company wasestablished, and classified all firms into five levels (up to 19 years old, 20-29 years old, 30-39 years
old, 40-49 years old, 50 years or older) depending upon the company age in the fiscal year at thestart of each time period to observe the trends by company age 12. Table 1-5 shows the Job
Creation Rate, Job Destruction Rate and other statistics in accordance with the above
classification.
For young firms that are 19 years old or younger, the Job Creation Rate showed a high level
above 4% for all of the time periods. The reverse was true of companies where the company age
was 50 years or greater, which showed the lowest Job Creation Rate among the five levels
regardless of the time frame in question. The younger the company, the higher the Job Creation
rate.
The relationship to Job Destruction Rate was not as clear as it was for the Job Creation Rate.
But a tendency for the Job Destruction Rate to be lower at companies where the company age isyounger can be seen 13. Because the Job Destruction Rate of firms with a long company history
declined substantially during the Fiscal 1988-1993 time period that included the bubble economy
years, this tendency weakened temporarily. But because this changed completely in the Fiscal
1993-1998 time period and firms with a high company age saw their Job Destruction Rate risemuch higher than that of other firms, however, the relative correlation of company age and Job
Destruction Rate until Fiscal 1983-1988 was further clarified.
Table 1-5. Trend by Company Age (Number of Years since Firm Established)

Job Creation Rate

Job Destruction Rate

Net Creation Rate

Percentage of firmsthat increased jobs

Fiscal
year
78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98

19 years or less

20-29 years

30-39 years

40-49 years

4.3
4.9
4.3
4.3
0.5
0.5
0.4
1.0
3.8
4.4
3.9
3.2
69.4
70.0
84.3
66.2

1.3
2.1
4.0
2.0
1.1
1.1
0.4
1.6
0.2
1.1
3.6
0.4
53.0
65.6
80.2
50.4

1.9
1.5
2.0
1.0
1.0
1.5
0.9
2.2
0.9
-0.1
1.1
-1.2
50.4
50.9
72.3
42.4

1.8
1.3
2.3
0.3
1.0
1.5
0.5
2.6
0.8
-0.2
1.8
-2.3
46.0
41.8
69.9
23.9

(Unit: %)50 years or
more
0.8
0.8
1.8
0.3
1.2
1.8
0.5
3.0
-0.4
-1.0
1.4
-2.6
36.2
36.2
65.9
13.5

Notes: 1. Classified into 5 levels by company age in the first fiscal year of each time period.
2. Annual average value for Job Creation Rate, Job Destruction Rate and Net Creation Rate.

12 While the dates when companies such as NTT, the various companies of JR and Japan Tobacco were established was the times

at which these companies were privatized, we excluded these companies from this study because they had in fact been
conducting business for many years.
13 The perception is that business risk is higher and changes in employment are larger at firms that lack a long history. Because welooked only at firms that were on a growth track and whose shares were listed and public traded for this report, there is apossibility that the results reflect a sampling bias towards a low Job Destruction Rate.
Development Bank of Japan Research Report/ No. 10

13

3.5. Trend by Average Age of Employees
Next we looked at the trend by the attributes of the employees at each firm – that is, the trend by
average age and average wage of employees. First we classified all firms into three levels
depending on their average age of their employees (34 years old or younger, 35-39 years old, and40 years old or older) in the first fiscal year of each time period. This provided the Job Creation
Rate and Job Destruction Rate by the average age of employees. As can be seen from the results
shown in Table 1-6, the tendency for the Job Creation Rate to be high and the Job Destruction
Rate to be low the younger the average age of a firm’s employees is clearly shown. During thetime period of Fiscal 1988-1993, however, the Job Destruction Rate of firms with an average
employee age of 40 years or older declined broadly, and the tendency for the Job Destruction
Rate to be lower with a young average age of employees weakened temporarily. In the time
period for fiscal 1993-1998, however, the Job Destruction Rate at firms where the average age of
employees was 40 years older or older rose substantially and the correlation between average ageof employees and Job Destruction Rate seen until the fiscal 1983-1988 time period became evenclearer.
Table 1-6. Trend by Average Age of Employees

Job Creation Rate

Job Destruction Rate

Net Creation Rate

Percentage of firmsthat increased jobs

Fiscal year
78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98

34 years or younger
2.0
2.3
3.1
1.0
0.7
1.0
0.6
2.1
1.4
1.3
2.5
-1.2
62.8
61.0
77.9
43.2

35-39 years old
0.7
0.6
1.7
0.4
1.5
1.7
0.7
2.7
-0.8
-1.1
1.0
-2.3
32.9
44.3
74.5
20.1

Notes: 1. Classified into 3 levels by average age of employees in the first fiscal year of each time period.
2. Annual average value for Job Creation Rate, Job Destruction Rate and Net Creation Rate.

14 Development Bank of Japan Research Report/ No. 10(Unit: %)40 years or older
0.3
0.3
1.0
0.1
2.7
3.2
1.1
4.3
-2.4
-2.9
-0.0
-4.2
16.9
21.4
54.3
12.2

3.6. Trend by Average Wage of Employees
We next examined the trend by the average wage of employees. For this report we defined theaverage wage of employees as the average monthly salary reported in the marketable securities
reports of each firm. Next we classified all firms into three roughly even levels which we called,
in order from the classification with the lowest average wage to the highest, as Classification I(Low), Classification II (Middle) and Classification III (High). We then calculated the Job
Creation Rate and Job Destruction Rate according to the above classifications, determining theresults that are shown in Table 1-7 14.
The relationship between the average wage of employees and the Job Creation Rate and Job
Destruction Rate is not as clear at the relationship for average age of employees. Despite the factthat the difference is small with regard to the Job Creation Rate, however, we can see a tendency
for the Job Creation Rate to decline as the average wage increases from Classification I to
Classification III. On the other hand almost no difference is found in the Job Destruction Ratefor differences in average wage.
Table 1-7. Trend by Average Wages of Employees
Fiscal year
Job Creation Rate

Job Destruction Rate

Net Creation Rate

Percentage of firmsthat increased jobs

78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98

Classification I
(Low)
2.3
1.6
2.8
1.3
1.3
1.8
1.1
3.0
0.9
-0.1
1.7
-1.7
51.2
50.5
66.9
35.5

Classification II(Middle)
1.3
1.3
2.2
0.4
1.1
1.5
0.7
2.7
0.2
-0.2
1.5
-2.2
46.1
44.3
72.3
24.9

(Unit: %)Classification III(High)
1.1
1.1
1.7
0.3
1.0
1.6
0.7
2.9
0.1
-0.5
1.0
-2.6
41.3
42.7
72.7
17.9

Notes: 1. Classified into 3 levels by average wage of employees in the first fiscal year of each time period.
2. Annual average value for Job Creation Rate, Job Destruction Rate and Net Creation Rate.

14 For the average wages reported here we used the average monthly wages as reported in marketable securities reports. As ageneral rule, the average monthly wages as defined for the reports is the average monthly wage per month including the final
month of the fiscal year in question, excluding bonuses. In addition to this data, information regarding average wages can beobtained by a method of dividing the portion equivalent to personnel expenses such as wages or salaries in the Income
Statement by the number of employees at the end of the fiscal year. We also completed an analysis using the latter method,which produced nearly identical results.
Development Bank of Japan Research Report/ No. 10

15

3.7. Trend by Revenues
Next we classified all firms into three levels according to the rate of revenue growth. For each
respective time period we calculated the rate of revenue growth from the beginning of the time
period until the end of the time period, and separated the firms into a group of firms where therevenue increased and a group of firms where the revenue decreased. We then classified all of thefirms into 3 levels we labeled Increasing Revenue (Upper), Increasing Revenue (Lower) and
Decreasing Revenue, by dividing in the group of firms that increased revenues evenly into twoclassifications (Upper, Lower) in order from the highest growth rate.
It is possible to confirm from the results shown in Table 1-8 that the higher the rate ofrevenue growth, the higher the Job Creation Rate and the lower the Job Destruction Rate. This is
the natural expected outcome, however, and what we are interested in here is how distinctly is
the tendency demonstrated when compared with other classifications. When we look at theresults again from this perspective, the correlation of revenue to the Job Creation Rate and Job
Destruction Rate is much more evident than for other classifications. This leads us to believe thatsales are a principal factor greatly influencing firms’ decision-making with regard to increases anddecreases in employment levels.
Table 1-8. Trend by Rate of Revenue Growth(Unit: %)Fiscal year
Job Creation Rate

Job Destruction Rate

Net Creation Rate

Percentage of firms that
increased jobs

78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98

Increasing Revenue(Upper)
2.1
2.4
3.6
2.0
0.5
0.4
0.1
1.3
1.5
2.0
3.5
0.6
67.9
70.5
88.1
60.2

Increasing Revenue(Lower)
0.4
0.8
1.5
0.2
1.8
1.5
0.9
2.6
-1.4
-0.7
0.6
-2.4
28.6
37.0
72.1
32.9

Decreasing Revenue
0.1
0.2
1.0
0.1
5.0
4.4
1.8
3.7
-4.9
-4.2
-0.8
-3.6
8.2
16.2
46.0
12.8

Notes: 1. Classified into 3 levels by rate of revenue growth from the beginning to the end of each time period.
2. Annual average value for Job Creation Rate, Job Destruction Rate and Net Creation Rate.

As the above shows, in addition to the important factor of expansion of business size as
seen in an increase in revenue, other factors that influence the job creation of firms are a
relatively small size, young company age, low average age of employees and low average wage of
employees. During the bubble era, however, we can see that overall the Job Creation Rate roseand the Job Destruction Rate fell regardless of whether a firm was large or small, the age ofcompany was high or low, and average age and average wages of employees was high or low.
These tendencies so unique to the bubble era are particularly evident at long-established firms orfirms where the average age of employees was high, and after the bubble collapsed the shift ofthese firms to a situation of stagnant labor demand is quite remarkable.

16 Development Bank of Japan Research Report/ No. 10

4. Employment Change Decision Model
In Section 3 we observed the characteristics of firms that increased or decreased employment byclassifying all firms into several levels using measures such as firm size, average employee wage
level and rate of revenue growth, and comparing the Job Creation rate and Job Destruction Rates
calculated for each respective classification. Re-totaling the microdata makes this analysis possible.
But because we use a re-totaling method, in some sense we cannot say we are using the wealth of
information already contained in the company-level data to the maximum extent possible.
Therefore in this section we will add some observations about the leading factors that influence
employment increases or decreases at firms by using microdata to approximate a simple
employment change decision model 15. The data we will use is the same data for individual listed
and publicly traded firms that we used in the preceding sections (excluding finance and insurance,
however).
We will assume the employment change decision model shown in Equation (1) to conduct across-section analysis for the time periods Fiscal 1978-1983, Fiscal 1983-1988, Fiscal 1988-1993
and Fiscal 1993-1998, respectively.

Yj = prob (Cj, Ik)

Equation (1)This model is a Probit model to explain each firm’s choice (Yj) to increase employment (1) or
not increase employment (0) using firm characteristics (Cj,) and industry characteristics (Ik). The
specific independent variables are shown in Table 1-9. For industry characteristics (Ik) weselected the percentage increase or decrease in employment in Industry k to which Firm j belongs
as the independent variable. That is, by deciding to make the industry characteristics fulfill therole of the industry dummy variable, we can observe those firm characteristics that influence thechange in employment by eliminating employment at Firm j as a factor that affects changes inIndustry k to which that firm belongs.

Firm characteristics

Table 1-9. Independent Variables (1)Independent variable

Assumed sign

Business expansion factor

Percentage change in revenues (Defrated using the GDP deflator foreach industry)+

Firm financial factor

Increase in debt ratio (defined here as liabilities/total assets)–

Firm size factor

Number of employees at year-end (first year of time period)+ or –

Employee aging factor

Average age of employees (first year of time period)+ or –

Labor quality factor

Average wage of employees (first year of time period)+ or –

Company age factor

Company age (first year of time period)+ or –

Industry characteristics

Percentage change in number of employees in the relevant firm’s
industry+

15 There are several examples of prior research using firm and business establishment data to estimate an employment decision-

making model. An analysis of principal causes of changes in employment in manufacturing was conducted by Tachibanaki andMorikawa (1998) using the business establishment data in tables in the Census of Manufactures. Abe (1999) analyzed the influencethat corporate governance has on employment by adding stock ownership percentage to the independent variables for the fourindustrial sectors of chemicals, iron and steel, electric machinery and wholesale and retail.
Development Bank of Japan Research Report/ No. 1017We adopted the following independent variables for firm characteristics (Cj). As the businessexpansion factor we used the rate of increase in revenue (deflated by the GDP deflator for eachindustry). The coefficient sign was assumed to normally be positive. As the firm financial factor
we used the range of increase in the debt ratio16, which we assumed would have a negative sign.
For the above two independent variables we decided to use a one-tail test as the test method.
For the following four independent variables we used a two-tail test, because a clear
theoretical background for assuming the sign of the coefficient cannot be determined and thesign could be positive or negative. As the firm size factor we adopted the number of employees
at the end of the time period as the independent variable. As we saw in Section 3, the smaller thenumber of employees the higher the Job Creation Rate, but simultaneously with this the tendency
was also seen until Fiscal 1983-1988 for the Job Destruction Rate to also be higher the smaller
the size of firm. So accurately assuming the direction of the sign is difficult. The average age of
employees is a representative variable for the employee age factor. We’ll look at how a change inthe make-up of employee age effects a firm’s personnel expense burden.
We used average wages of employees for the indicator to show labor quality. We reasoned
that if wages are assumed to be consistent with marginal productivity of labor and correctlyreflect labor quality skills or ability, the sign will be positive if the industry characteristics can becompletely eliminated because a firm’s labor quality is believed to be high when its wages arehigh and the firm is superior to other firms in the same industry. If wages are not consistent withthe marginal productivity of labor, however, this will not be the case. We assume that when there
is wage inflexibility (“stickiness”) in a downward direction and wages are relatively high in
relation to the marginal productivity of labor, the labor cost side including wages will beemphasized and the sign will be negative.
Finally, we added company age factor as an independent variable 17. To the extent we saw inthe results of Section 3 a high company age has a negative influence on employment, but
although the sign is assumed from experience to be negative the theoretical basis for this is notclear. To venture a theory, we think that as a company ages its decision-making becomes morerigid, the firm loses dynamism, and it becomes indecisive about expansion in new businesssectors and slow to respond to changes in its business, all of which can have a negative effect on
employment. But because of the fact there are established firms thought to have survived a longtime precisely because they possess traits superior to other companies, the possibility that the sign
is positive cannot be eliminated.
In addition to the Probit model estimation composed of the above independent variables,
we also made an estimate using the ordinary least squares method (OLS). For the estimation by
OLS we defined the dependent variable to be the percentage increase or decrease in the numberof employees of each firm, and used the exact same variables as the Probit model for the
independent variables. Furthermore, in order to avoid the scattering unevenness sometimes
found in cross-section analysis, we applied White’s correction 18 when performing the t tests.
The results of the above estimation are shown in Table 1-10.
First, except for the Fiscal 1983-1988 OLS the industry characteristics all showed significant
positive values, making it possible to verify that factors such as the overall demand trend for the
16 Although the debt ratio normally refers to debt/equity, for this report we defined the debt ratio to be debt/total assets.
17 For NTT, the various JR companies and Japan Tobacco, we calculated the company ages from the dates when Nippon

Telegraph and Telephone Corporation (1952), Japan National Railway (1949) and Japan Monopoly Corporation (1949), thepredecessor companies, were established.
18 Because of the possibility for scattering unevenness to remain in the results from the Breusch-Pagan Test or White Test, we
performed White’s correction. The consistent standard errors from White’s correction are called HCSEs (HeteroskedasticityConsistent Standard Errors).
18 Development Bank of Japan Research Report/ No. 10

industry to which a firm belongs has an effect on employment. Looking at firm characteristics,
the percentage increase or decrease in revenues showed significant positive values with the Probit
and OLS methods through all time periods, showing that the firm growth factor is an importantcause of employment increases. Although the size of the increase in the debt ratio also showed anegative value through all time periods, the only significant result before Fiscal 1983-1988 waswith the Probit model for Fiscal 1978-1983. All of the characteristics show significant negativevalues from Fiscal 1988-1993 onward, and we can infer that the firm financial factor increased inimportance. The number of employees at the end of the first year in each time period generallyshows a significant negative value and the firm size factor is also believed to have a negative
effect on changes in employment. The average age of employees has significant negative values,
and we conjecture that firms where the burden for personnel expense is growing because of theincrease in average employee age are firms that are cutting employment. The average wage of
employees shows significant positive values until Fiscal 1988-1993 and firms with high labor
quality were increasing employment. This became less clear in Fiscal 1993-1998, however, when
we believe the cost side including wages was emphasized more. We believe that as the averageage of employees increased the percentage of workers positioned near the peak of the wage
profile has increased, which also effects average wages, and it’s possible this made the cost side
including wages more obvious. Except for Probit for Fiscal 1988-1993 the company age factor
shows significant negative values, and we surmise that firms where the ability to grow has
declined as they grew older are reducing employment.
Table 1-10.

Estimation Results (1)Fiscal 1978-1983
PROBIT
OLS

Constant term

2.89**
7.79

39.70**
6.15

Fiscal 1983-1988
PROBIT
OLS
2.64**
7.36

41.99**
7.14

Fiscal 1988-1993
PROBIT
OLS
1.54**
5.16

Percent change in revenues
7.67´10-3**
0.12**
0.01**
0.19**
0.01**(Deflated using GDP deflator for
9.99
7.72
12.55
11.11
11.12
each industry)-0.01**-0.01**-0.06-3.76´10-3-0.01
Increase in debt ratio
-3.32
-0.46
-1.21
-0.23
-4.92
Number of employees at year-6.99´10-6 -1.69´10-4** -1.17´10-5** -2.08´10-4** -2.44´10-6end (first year of time period)
-1.05
-3.07
-1.69
-2.89
-0.54
Average age of employees (first-0.11**-1.51**-0.10**-1.50**-0.08**
year of time period)
-9.20
-7.93
-9.09
-8.12
-8.68
Average wage of employees (first 3.06´10-3**
0.07**
3.39´10-3**
0.06**
4.91´10-3**
year of time period)
2.48
2.82
3.63
2.72
7.05
Company age (first year of time
-7.69´10-3**-0.13**-6.27´10-3**-0.15**
1.52´10-3
period)
-3.13
-4.11
-4.57
-4.57
0.72
0.02**
0.32**
0.02**
0.02**
0.08
Industry characteristics
4.47
2.77
3.60
1.11
6.00
Sample size
Number of positive cases
Logarithmic likelihood
Adj. R2
F value

1.543
685-866.11.638
762-904.50.22
62.3

41.79**
7.50

2.10**
7.30

21.49**
4.29

0.25**
11.22

0.01**
13.53

0.32**
7.34-0.06**-1.40-1.73´10-4-1.52-1.47**-9.72
0.06**
5.10-0.07**-2.28
0.41**
6.21

2,008
1,407
-1,032.0
0.28
90.0

Fiscal 1993-1998
PROBIT
OLS-0.02**-0.18**-5.56-2.03-2.82´10-5** -1.81´10-4**
-3.28
-2.36
-0.06**-0.58**-5.90-3.31-4.07´10-5
0.11
-0.07
1.18
-0.01**-0.15**-4.69-4.68
0.04**
0.68**
6.84
5.24
2,396
648
-1,104.9

0.30
124.6

0.19
83.0

Notes: 1. The dependent variables are as follows. For Probit the firms that increased employment are positive. For OLS, figures
are the percentage change in the number of employees at each firm.
2. The lower set of values in each row is the t Value; “*” indicates significant to the 10% level, “**” indicates significant
to the 5% level.
3. Excluding finance and insurance.

Development Bank of Japan Research Report/ No. 10

19Next let us analyze the 1990s in a little more detail, using newly added independent variables.
The independent variables are shown in Table 1-11. First we’ve added the size of the increase inoperating profit margin since the prior time period and a dummy variable for two consecutive
periods of operating losses (prior period, period before the prior period) as an operating
performance factor. We assume the sign for the size of increase in operating profit margin to bepositive and the sign for the dummy for two consecutive periods of operating losses to be
negative. Muramatsu (1986) or Abe (1999) found results showing that two consecutive periods ofoperating losses effect decision-making to reduce employment for certain groups of firms orindustry classifications, but we’ll look to see whether this result occurs for all of the industry
classifications (finance and insurance excluded). Furthermore, in light of the fact that firmmanagers have recently been focusing on market evaluations such as stock price or debt ratings,
we adopted the percentage increase in stock price from the prior time period as a market factor.
We assume this has a positive sign. We carried out our esitmations for four time periods covering
Fiscal 1991-1992, Fiscal 1993-1994, Fiscal 1995-1996 and Fiscal 1997-1998; the results are shownin Table 1-12.
Table 1-11. Independent Variables (2)Firm characteristics

Business expansion factor
Operating performancefactors
Firm financial factor
Market factor

Firm size factor
Employee aging factor
Labor quality factor
Company age factor
Industry characteristics

Independent variable
Percentage change in revenues (prior time period)
Size of increase in operating profit margin (prior time period)
Dummy variable for two consecutive periods of operating losses (losses in
the prior period and period before the prior period)
Increase in debt ratio (defined here as liabilities/total assets) (Prior period)
Percentage increase in stock price (percentage increase in average ofhighest and lowest stock prices during time period and prior period)
Number of employees at year-end (first year of time period)
Average age of employees (first year of time period)
Average wage of employees (first year of time period)
Company age (first year of time period)
Percentage change in number of employees in the relevant firm’s industry

20 Development Bank of Japan Research Report/ No. 10

Assumed sign
+
+
–
–
+
+ or –+ or –+ or –+ or –+

Table 1-12.

Estimation Results (2)Fiscal 1991-1992

Fiscal 1993-1994

Fiscal 1995-1996

Fiscal 1997-1998

PROBITOLSPROBITOLSPROBITOLSPROBIT

OLS

1.05**
4.02
0.02**
6.65

8.60**
4.60
0.12**
3.35

0.30
1.64
0.03**
10.44

1.41
0.73
0.13**
3.98

2.54**
9.21
0.01**
6.09

10.69**
6.22
0.09**
3.21

3.22**
12.18
0.02**
8.36

13.34**
7.14
0.11*
3.82

0.01*
1.31

0.15**
1.76

1.83´10-3
0.22

0.10
0.95

7.64´10-3
0.92

0.08
1.02

0.02**
2.53

0.23**
2.54-0.56**-2.96-3.96**-2.80-0.67**-5.94-5.29**-6.69-0.71**-5.17-5.59*-6.39-0.41**-2.61-7.61**-6.82

Increase in debt ratio(prior time period)-6.60´10-3-1.13-0.10**-1.82

9.24´10-3
1.69

0.16
0.98

-8.38´10-3*-1.39-2.16´10-4-4.24x10-3-8.25´10-3*-1.48-0.10**-2.17

Percentage increase in stock price(prior time period)
Number of employees at year-end(first year of time period)
Average age of employees (firstyear of time period)
Average wage of employees (firstyear of time period)
Company age (first year of time
period)6.28´10-3**
0.02**
1.98´10-3**
3.83
1.68
1.88
1.48´10-6 -2.44´10-5** -2.06´10-5**
0.40
-2.28
-2.81
-0.06**-0.25**-3.81x10-4
-7.28
-4.69
-0.14
4.35´10-3** 5.81´10-3
6.12´10-4
7.35
1.33
1.25
2.22´10-3-0.01**
2.19´10-3
1.19
0.22
-5.90
0.06**
0.39**
0.11**
3.52
2.49
6.87

0.03**
3.16-2.92´10-5
-2.46
0.03
0.50
-1.57´10-3-0.45-0.04**
0.299
0.48**
4.23

1.39´10-3
1.07-1.39´10-5**-2.07-0.06**-7.04-4.42´10-4-0.86-0.01**-5.25
0.07**
3.89-4.77´10-3-0.52-1.35´10-5-1.09-0.27**-5.66
1.75´10-3
0.73-0.05**-4.80
0.35**
4.16

9.16´10-3**
0.04**
6.44
4.51-1.73´10-5** -2.56´10-5**
-2.46
-2.12
-0.08**-0.32**-9.32-5.53
1.85´10-4
2.77´10-3
0.40
0.80-0.01**-0.04**-5.52-3.58
0.06**
0.05**
4.33
4.57

Constant term
Percent change in revenues(prior time period)
Size of increase in operating profit
margin(prior time period)
Dummy variable for two
consecutive periods of operating
losses (losses in prior period andperiod before the prior period)

Industry characteristics
Sample size
Number of positive cases
Logarithmic likelihood
Adj. R2
F value

2,217
1,443
-1,308.2

2,348
847-1,344.5
0.06
15.7

2,553
763
-1,365.2
0.11
28.9

2,847
897
-1,456.6
0.15
44.9

0.17
59.6

Notes: 1. The dependent variables are as follows. For Probit the firms that increased employment are positive. For OLS, figures
are the percentage change in the number of employees at each firm.
2. The lower set of values in each row is the t Value; “*” indicates significant to the 10% level, “**” indicates significant
to the 5% level.
3. Excluding finance and insurance.

The industry characteristics are shown as significant positive values in the same manner as
the estimation results shown in Table 1-10. Looking at firm characteristics, the increase inrevenues shows significant positive values, indicating the firm growth factor to an importantcause of increases in employment. The size of the increase in operating profit margin has
significant positive values for Fiscal 1991-1993 and Fiscal 1997-1998, suggesting that theoperating result factor also influences change in employment. The dummy variable for two
consecutive periods of operating losses shows significant negative values, so the results
determined that for cases covering all industrial sectors as well (excluding finance and insurance),
two consecutive periods of operating losses do influence cutbacks in employees. The size of theincrease in the debt ratio also shows significant negative values for Fiscal 1995-1996 andthereafter for the Probit model, and for Fiscal 1991-1992 and Fiscal 1997-1998 for OLS, so weDevelopment Bank of Japan Research Report/ No. 1021can see that financial health too influences changes in employment. In addition, the percentage
increase in stock price shows significant positive values for all periods except for Fiscal 19951996. Stock price is an indicator that comprehensively reflects expected future profits or assets
values, and gives us a look at circumstances where changes in the market valuation of a firm andchanges in employment move together almost consistently 19. The number of employees at theend of the first year in each time period is not always significant but does show negative values;
the effect of the firm size factor is also undeniable. The average age of employees shows
significant negative values except for Fiscal 1993-1994, and we conjecture that firms where theburden for personnel expense is growing because of the rise in average employee age are firmsthat are cutting employment. Almost no significant values were obtained for the average wage of
employees, and the influence that high labor quality has on employment is unclear. Except for
Fiscal 1991-1992 the company age factor shows significant negative values, a result that shows
the increase in company age has a negative effect on employment.
When the results of the above analysis are taken together, the factors that can be observed toeffect job creation at firms, in addition to firm growth or operating results such as firm profits,
include comparatively small size, young company age, and low average age of employees. We canalso see that during the 1990s the importance of the financial health of a firm increased and wasadded to the other important factors.

19 As indicated in the report, a firm’s stock price is formed from and reflects fundamentals such as expected future profits or assets

values. When the market valuation does not correctly reflect and is divorced from the fundamentals, however, the difference
from the stock price the market was expected to originally form may exert an unforeseen shock to a firm.
22 Development Bank of Japan Research Report/ No. 10

II Observations Regarding Factors Behind the Spread of Temporary
Employment
1. Motivation and Data
The increase in the number of irregular workers without full-time contracts can be pointed to as
the single largest change in Japan’s labor market since the 1980s. Principal factors on the labor
supply side that have long been regarded as important causes for the remarkable increase inirregular employees include the increase in the number of married women participating in thelabor force or the need for part-time or second jobs by younger workers. In the latter half of the
1990s, however, firms have strengthened their preference for irregular labor rather than regularlabor, and factors on the labor demand side causing changes in the appropriate proportion ofregular and irregular workers being considered by firms have begun to grow in importance. Putanother way, this is an indication that for firms the trend to rely on part-time or temporary
workers – with their lower cost and higher flexibility – instead of using regular, full-time
employees is growing stronger 20. The purpose of this chapter is to use enterprise data toinvestigate whether there is indeed a movement to substitute regular employment with temporary
employment.
As in Chapter I, we will study listed and publicly traded firms by making an analysis using
the data from individual firms (excluding the finance and insurance sector, however). It is notpossible to precisely understand the number of irregular workers because of limitations in thedata. But when the number of temporary employees exceed a certain number and is listed inmarketable securities reports 21, we will conduct our analysis of irregular workers by treatingthese numbers as temporary employment.
The data used in this chapter is also based on the Development Bank of Japan’s company
finance databank that was used for the analysis discussed in Chapter I. As explained previously,
we have treated the data in the category “Number of Employees at Year-end” as regular
employees, and treated the data for “temporary, part-time and other employees otherwise notincluded in end-of-period employees” as temporary employees. We removed firms that had nodata in “temporary, part-time and other employees otherwise not included in end-of-period
employees” from the sample, however. As a result we were able to use approximately 1,700 firms
for the sample for Fiscal 1998. Also as previously explained we have normalized the data. The
time periods used for the analysis are the same as those in Chapter I; the years after Fiscal 1978
when the data was restricted 22.
20 In their analysis, Osawa and Hausman (1999) reached the conclusion that the principal cause of the increase in part-time

employment in Japan is the increase in demand for part-time workers on the labor demand side, and that the increase inparticipation in the labor market by married women, a labor supply side factor, can account for no more than about 20% of thetotal explanation.
21 There is no precise definition for the “temporary employees” that are listed in marketable securities reports. Although a firm
may recognize a worker as a temporary employee, the number of individuals listed is the number of employees who have their
number of work hours stipulated in an employment contract. Care must therefore be exercised because this is not necessarily
consistent with the classification in the Labor Force Survey from the Management and Coordination Agency. The firms that must
publicly report the number of temporary employees in their marketable securities reports are firms that rely on temporary
employees for 10% or more of their workforce. Firms to which this applies must list the average number of employees during
the course of a year. Firms may omit this information when such workers are less than 10% of their total workforce, so it is notpossible to obtain the number of temporary workers for all listed and publicly traded firms. Because the data for firms that do
not reach 10% is dropped, a note must be made of this sample bias.
22 As explained in Chapter I, both “number of employees at year-end” and “temporary, part-time and other employees otherwise
not included in end-of-period employees” are listed in the Development Bank of Japan’s company finance databank beginningfrom Fiscal 1977.
Development Bank of Japan Research Report/ No. 10

23

2. Creation and Destruction of Temporary Employment
We began by applying the Job Creation Rate and Job Destruction Rate used for the analysis in
Chapter I to temporary jobs. We’ve called the figure obtained by dividing the total of theincreased part of temporary employment at firms that increased temporary employment during
Period t by total temporary employment for all firms at the beginning of Period t the Temporary
Job Creation Rate, and we’ll call the figure derived by dividing the total of the decreased part of
temporary employment at firms that decreased temporary employment during Period t by the
total temporary employment for all firms at the beginning of Period t the Temporary Job
Destruction Rate. We divided the past 20-year period into four time periods covering Fiscal
1978-1983, Fiscal 1983-1988, Fiscal 1988-1993 and Fiscal 1993-1998, and calculated the Job
Creation Rate and Job Destruction Rate (annual averages) for temporary employment and fulltime employment, respectively. The results are shown in Table 2-1. 23
Table 2-1. Temporary Job Creation Rate and Destruction Rate
(Unit: %)Job Creation Rate

Job Destruction Rate

Net Creation Rate

Percentage of firms that
increased jobs

Fiscal year

Full-time employment

78-83
83-88
88-93
93-98
78-83
83-88
88-93
3.0
78-83
83-88
88-93
93-98
78-83
83-88
88-93
93-98

1.6
1.4
2.4
0.8
1.2
1.4
0.5
2.5
0.4
-0.0
1.9
-1.8
47.5
50.8
71.7
33.8

Temporaryemployment
5.5
5.0
3.9
5.8
1.5
2.4
1.8
1.4
4.0
2.6
2.1
4.4
49.5
54.6
47.1
49.6

Total
1.9
1.8
2.5
1.8
1.0
1.3
0.5
1.9
0.9
0.5
2.0
-0.1
50.5
55.7
69.1
37.8

Notes: 1. The Job Creation Rate, Job Destruction Rate and Net Creation Rate are annual average values.
2. Excluding finance and insurance.

The Temporary Job Creation Rate is consistently higher than the creation rate for full-timejobs. During Fiscal 1978-1983, Fiscal 1983-1988 and Fiscal 1993-1998 the Temporary Job
Creation Rate was 5.5%, 5.0% and 5.8, respectively, levels that are in no way comparable to thefull-time employment Job Creation Rate that was less than 2% during these time periods. In thetime period covering Fiscal 1988-1993 that included the bubble economy period, however, thedemand for full-time jobs increased and the full-time Job Creation Rate rose to 2.4%. At thesame time the Temporary Job Creation Rate declined to 3.9%, nearly closing the gap between thetwo rates. The kind of movement seen during the bubble era is believed to be not only the resultof intensified awareness of the shortage of workers, but also reflected the concerns thatcompanies had about ensuring an adequate labor force for the future. Ultimately the increase in
23 The Creation Rate for full-time employment shown above was calculated for firms that listed data for temporary employment,

because it was calculated for the purpose of comparison to the Temporary Job Creation Rate. Accordingly, the figures are notconsistent with sample size shown and discussed in Chapter I and the results also differ slightly.
24 Development Bank of Japan Research Report/ No. 10

demand for full-time workers ran its course after a few years and during Fiscal 1993-1998, the
Job Creation Rate for full-time jobs plunged below 1%. The Temporary Job Creation Rate forthe same time period meanwhile reversed and climbed to more than 5%, once again widening the
gap between the two rates.
Until Fiscal 1988-1993 the Job Destruction Rate was higher for temporary employment thanfor full-time employment. During Fiscal 1993-1998, however, following the collapse of the
bubble economy, the Job Destruction Rate for full-time employment rose rapidly to 2.5%, while
the Temporary Job Destruction Rate moved in the opposite direction and fell to 1.5%. So the
Job Destruction Rate for full-time employment exceeded the Job Destruction Rate for temporary
work.
Next let us turn our attention to the number of firms that increased temporary employment
or full-time employment and examine the shares they represent respectively of all firms. The
percentage of firms that increased temporary employment (Temporary Job Creation Firms) was
stable throughout the past 20-year period at about 50%; the slight decline observed above in the
Temporary Job Creation Rate in Fiscal 1988-1993 was an anomaly. On the other hand, thepercentage of firms that increased full-time employment (Full-time Job Creation Firms) wasaround the 50% level in Fiscal 1978-1983 and Fiscal 1983-1988, similar to the level for temporary
employment. When we turn to the period for Fiscal 1988-1993 that includes the bubble years,
however, in contrast to the stable percentage for temporary employment that hovered around
50% the figure for full-time employment climbed above 70%. During Fiscal 1993-1998, after thecollapse of the bubble economy, the percentage for Full-time Job Creation Firms reversed anddeclined to nearly 30% of all firms in the survey, a movement that contrasts sharply to that for
temporary employment, which remained stable at approximately 50%.
When we turn to the Temporary Job Net Creation Rate by industrial sector shown in Table
2-2, the growth in the wholesale and retail or services sector where the temporary employment
ratio is high is quite large 24. Both of these industrial sectors show high Net Job Creation Rates
exceeding 6% annually despite the fact that they reduced full-time employment during Fiscal
1993-1998.
Table 2-2. Net Job Creation by Industrial Sector (by Full-time and Part-time
Employment)
Fiscal year
All industries
Manufacturing
Construction
Wholesale and retailTransportation andtelecommunications
Services
Other

Full-time Net Job Creation Rate
(Annual average, %)
78-83
83-88
88-93
93-98
0.4
-0.0
1.9
-1.7
0.7
-0.2
1.8
-1.7
2.1
-0.7
3.2
-1.2
0.6
0.8
2.3
-1.9

Temporary Net Job Creation Rate
(Annual average, %)
78-83
83-88
88-93
93-98
4.0
2.6
2.1
4.4
3.8
1.6
-1.0
-0.1
-2.4
-6.8
0.6
-2.9
5.6
4.3
3.5
6.5

TemporaryJob Ratio
98
29.8
13.7
11.1
53.9

-1.5

-0.3

1.7

-1.7

0.5

-4.6

0.2

0.7

10.3

0.9
-4.7

1.3
-3.7

3.1
-1.7

-0.1
-0.7

-0.8
-1.4

6.1
-2.4

5.8
-0.8

6.0
2.8

50.5
21.9

Notes: 1. The Temporary Job Ratio is the ratio of the number of temporary employees as a percentage of all employees (fulltime plus part-time).
2. Excluding finance and insurance.

24 The Temporary Job Ratio in Table 2-2 appears much larger than the figures calculated using the Labor Force Survey. The principal

reasons are believed to be the difference in the definition of “temporary employment” and the influence of the fact that thefigures in Table 2-2 were calculated using only listed and public traded firms that provide information about temporary
employment in their marketable securities reports.
Development Bank of Japan Research Report/ No. 10

25

3. Investigation of the Substitution of Full-time Employment with Temporary
Employment
Think of the increased temporary employment at firms that reduced full-time employment aswell as those that increased temporary employment as the “substitution of full-time employment
with temporary employment”, with the size of the reduction of full-time employment as theupper limit. Strictly speaking the phenomenon of an increase in temporary employment that
accompanies the reduction of full-time employment cannot, in and of itself, be said to reflect thedecision-making to substitute temporary employment for full-time employment. But we believethat an understanding of this substitution activity can provide some valuable information. Basedon the above premise, we estimated the contribution from the “substitution of full-time
employment with temporary employment” and have shown this in Table 2-3 contrasted with the
Temporary Job Creation Rate.
Table 2-3.

Temporary Job Creation Rate Factor Analysis(Unit: %)Fiscal year
78-83
83-88
88-93
93-98

Temporary Job
Creation Rate
5.5
5.0
3.9
5.8

Substitution of full-time
employment with temporary
employment
1.1
1.0
0.2
1.1

Other
4.4
4.0
3.7
4.7

Notes: 1. Increased temporary employment at firms that reduced full-time employment as well as those that increased
temporary employment used as the “substitution of full-time employment with temporary employment”, with the sizeof the reduction of full-time employment as the upper limit.
2. Excluding finance and insurance.
3. Annual average values.

The contribution from the “substitution of full-time employment with temporary
employment” was 1.1% in Fiscal 1978-1983, 1.0% in Fiscal 1983-1988, 0.2% in Fiscal 1988-1993
and 1.1% in Fiscal 1993-1998. Despite the large decrease in the percentage in Fiscal 1988-1993
when demand for full-time employment temporarily rose, this shows the contribution for allother time periods to be at about 1%. Looking at Table 2-4, which shows this contribution level,is has remained stable at approximately 20% with the exception of Fiscal 1988-1993, with theremaining approximately 80% being explained by other factors. In other words, the phenomenon
is believed to result from the increase in pure demand for temporary employment. Looked at byindustrial sector, the contribution level from the “substitution of full-time employment withtemporary employment” is conspicuously low in the wholesale and retail sector and the service
sector, where the Temporary Job Ratio is high. In these industrial sectors the objective of
replacing full-time employees is much lower than in other industrial sectors. So the fact that jobs
that feel temporary employment is necessary are expanding can be regarded as the main factor
causing the increase in temporary employment.

26 Development Bank of Japan Research Report/ No. 10

Table 2-4. Contribution Level of “Substitution of Full-time Employment with
Temporary Employment” to the Temporary Job Creation Rate (by Industry Sector)(Unit: %)Fiscal year
All industries
Manufacturing
Construction
Wholesale and retailTransportation and telecommunications
Services
Other

78-83
20.5
23.9
0.0
14.2
85.3
40.0
57.7

83-88
20.8
43.1
7.8
13.0
0.0
16.4
86.1

88-93
5.6
16.4
0.2
2.7
13.2
1.9
3.1

93-98
19.4
37.8
37.8
16.2
38.4
17.3
31.9

Note: Excluding finance and insurance.

We classified all firms into a group of firms that increased full-time employment (Full-time
Job Creation Firms) and a group of firms that decreased full-time employment (Full Time Job
Destruction Firms) and shows the Temporary Job Net Creation Rate for the respective groups.
The Temporary Job Net Creation Rate is consistently higher for the Full-time Job Creation Firms
than for the Full-time Job Destruction Firms, particularly in Fiscal 1993-1998, when in contrast
to the Full-time Job Destruction Firms which remained at 2.3% the Full-time Job Creation Firms
increased to 7.9%.
Two facts can be determined from the analysis so far. The first is the fact that thesubstitution of full-time employment with temporary employment is not very large when looked
at on the basis of number of employees. Many temporary jobs are being created at firms that are
increasing full-time employment, and the substitution of full-time employment with temporary
employment did not exceed the 20% level of the Temporary Job Creation Rate. The second is
the fact that the move to substitute full-time employment with temporary employment shows thesame level of influence as in the 1980s when it had already appeared, meaning there has not beena more remarkably pronounced shift in the latter half of the 1990s. Because this substitution
movement did weaken temporarily during the bubble era, however, the substitution effect can besaid to be stronger in comparison to the start of the 1990s.
Table 2-5. Percentage Change in Temporary Employment by Increase or Decrease in
Full-time Employment
Fiscal year
87-83
83-88
88-93
93-98

Firms that increased full-time
employment
5.7
2.9
3.0
7.9

(Unit: %)Firms that decreased full-time
employment
2.0
2.3
-0.3
2.3

Notes: 1. Excluding finance and insurance.
2. Annual average values.

Next let us try to measure the size of the movement to substitute full-time employment withtemporary employment by looking at the number of firms that made this change, rather thanlook at the number of employees.
We classified all firms into a group of firms that increased temporary employment(Temporary Job Creation Firms) and a group of firms that decreased temporary employment(Temporary Job Destruction Firms). The percentage of firms that reduced full-time employment
in the respective groups of firms is shown in Table 2-6. The percentage of firms that reduced
Development Bank of Japan Research Report/ No. 1027

full-time employment is consistently higher for Temporary Job Destruction Firms than it is for
Temporary Job Creation Firms, a result that is consistent with the results achieved when we
looked at by number of employees. If we focus here on the Temporary Job Creation Firms, theratio of firms that reduced full-time employment moved in a range around 40% in Fiscal 19781983 and Fiscal 1983-1988. But after declining to nearly the 20% level in Fiscal 1988-1993, theratio reversed course and soared to a level exceeding 50% in Fiscal 1993-1998. Even in the mostrecent three years, which are shown in Table 2-7, we can verify that among the firms that
increased temporary employment more than half of the firms reduced full-time jobs.
From this analysis we can determine a third new fact. That is, in the latter half of the 1990s
more than half of the firms increasing temporary jobs were decreasing full-time jobs, and looking
at the number of firms we can say that the move to substitute temporary jobs has strengthened
during the latter part of the 1990s.
Table 2-6. Percentage of Firms That Reduced Full-time Employment, by Increase or
Decrease in Temporary Employment
Fiscal year
87-83
83-88
88-93
93-98

Firms that increased
temporary employment
40.5
44.4
22.6
56.0

(Unit: %)Firms that decreased
temporary employment
63.3
53.8
32.9
76.1

Note: Excluding finance and insurance.

Table 2-7. Number of Firms That Increased or Decreased Full-time Employment,
Looked at by Increase or Decrease in Temporary Employment(Unit: company; unit for numbers in parentheses: %)Fiscal
year

96

97

98

Samplefirms

Number of firms
Component Ratio A
Component Ratio B
Number of firms
Component Ratio A
Component Ratio B
Number of firms
Component Ratio A
Component Ratio B

1,585(100.0)1,563(100.0)1,680(100.0)-Firms that increased temporary employment
Firms thatFirms that
decreased fullincreased fulltime
time
employment
employment
795
331
446
(50.2)(20.9)(28.1)(100.0)(41.6)(56.1)
851
399
440(54.4)(25.5)(28.2)(10.0)(46.9)(51.7)
711
336
365(42.3)(20.0)(21.7)(100.0)(47.3)(51.3)

Firms that decreased temporary employment
Firms thatFirms that
increased full- decreased fulltime
time
employment
employment
568
146
407
(35.8)(9.2)(25.7)(100.0)(25.7)(71.7)
592
192
392(37.9)(12.3)(25.1)(100.0)(32.4)(66.2)
858
242
597(51.1)(14.4)(35.5)(100.0)(28.2)(69.6)

Notes: 1. Shows the change compared to the prior fiscal year-end.
2. Component Ratio A shows the component ratio for the total sample. Component Ratio B shows the component ratio
for firms that increased temporary employment or firms that decreased temporary employment.
3. Totals may not agree because there are some firms that did not change temporary employment or full-time
employment.
4. Excluding finance and insurance.

In the following paragraphs we examine the issue of what kind of firms displayed this moveto substitute full-time employment with part-time employment. First let us observe therelationship between the average age of employees and the substitution of full-time employment
28 Development Bank of Japan Research Report/ No. 10

with temporary employment. We divided the firms in each industrial sector into two levels(Upper, Lower) using the average age of employees in Fiscal 1993 and measured the contribution
level of “substitution of full-time employment with temporary employment” to the Temporary
Job Creation Rate in Fiscal 1993-1998, using the same method we used for Table 2-4. We
measured this by industrial sector because there are disparities in the average age of employees
among industrial sectors. As seen in Table 2-8, the results showed that of the six industrial
sectors, in the four sectors of manufacturing, wholesale and retail, transportation andtelecommunications, and other, firms where the average age of employees was high had a strong
tendency to substitute full-time employment with temporary employment.
Next let us examine the relationship between the average wage of employees and thesubstitution of full-time employment with temporary employment. We classified the firms into
two levels (High, Low) by the average wage of employees in Fiscal 1993, and measured thecontribution level to “substitution of full-time employment with temporary employment” in the
Fiscal 1993-1998 time frame in the same manner as for average age of employees. As can be seenfrom the results shown in Table 2-9, in all six industrial sectors the tendency to substitute fulltime employment with temporary employment was strongest in the group of firms with a highaverage wage.
From the results of the above analysis we can see that the tendency for firms to rely on
lower cost and flexible temporary employees or employees seeking part-time work and side jobs,
rather than employ permanent, full-time employees when workers retire or are laid off, is strong
at firms with high average employee age or wages. It is difficult to think that firms use temporary
employment as a substitute for high wage, trained workers when firm-specific skills acquired
through OJT (on the job training) or experience unique to a firm have lifted the marginal
productivity of labor, which is reflected in the wages paid. The results of this paper in which sucha phenomenon can be seen, however, do suggest that for firm management, the move to adjust
the suitable percentages of employees who have a firm-specific skill and those who do not isstrong.
Table 2-8. Contribution Level of Temporary Job Creation Rate (Fiscal 1993-198)(Classified According to Average Age of Employees)(Unit: %)Manufacturing
Construction
Wholesale and retailTransportation andtelecommunications
Services
Other

High
Low
High
Low
High
Low
High
Low
High
Low
High
Low

Substitution of full-time
employment bytemporary employment
76.6
15.8
29.8
42.5
41.7
10.5
100.0
31.7
21.3
22.9
100.0
23.3

Other
23.4
84.2
70.2
57.5
58.3
89.5
0.0
68.3
78.7
77.1
0.0
76.8

Notes: 1. Shows contribution level by classifying firms into two roughly equal classifications (High, Low) based on average ageof employees in each industry and analyzing Temporary Job Creation Rate factors for each respective group of firms
during Fiscal 1993-1998 as “substitution of full-time employment with temporary employment” and “other causes”.
2. Excluding finance and insurance.

Development Bank of Japan Research Report/ No. 1029

Table 2-9. Contribution Level of Temporary Job Creation Rate (Fiscal 1993-1998)(Classified by Average Wage of Employees)(Unit: %)Manufacturing
Construction
Wholesale and retailTransportation andtelecommunications
Services
Other

High
Low
High
Low
High
Low
High
Low
High
Low
High
Low

Substitution of full-time
employment withtemporary employment
57.6
17.8
60.5
31.1
19.1
13.3
92.3
33.8
24.8
22.2
66.9
31.8

Other
42.4
82.2
39.5
68.9
80.9
86.7
7.7
66.2
75.2
77.8
33.1
68.2

Notes: 1. Shows contribution level by classifying firms into two roughly equal classifications (High, Low) based on averagemonthly wage of employees in each industry and analyzing Temporary Job Creation Rate factors for each respective
group of firms during Fiscal 1993-1998 as “substitution of full-time employment with temporary employment” and“other causes”.
2. Excluding finance and insurance.

30 Development Bank of Japan Research Report/ No. 10

Conclusion
In this paper we observed the factors that influence the Job Creation Rate and the Job
Destruction Rate by using data for listed and publicly traded individual firms. We also added ananalysis of the tendency to utilize temporary employment, which has shown strong growth sincethe 1980s. We have summarized the conclusions drawn from the results as follows.
First, we shows important factors that are influencing the Job Creation Rate and Job
Destruction Rate.
1. Important factors influencing job creation at firms include, in addition to the firm’s businessexpansion or operating results such as firm profitability, a comparatively small size, young
company age, and young average age of employees.
2. In addition to these factors, during the 1990s the health of a firm’s financial structure has
been increasing in importance.
3. During the years of Japan’s bubble economy, the Job Creation Rate rose and the Job
Destruction Rate declined overall without regard to whether a firm was large or small or youngor old, or whether the average age or average wage of the employees was high or low. This
singular tendency of the bubble era was particularly conspicuous at firms with a long history or
firms where the average age of company employees was high. The change of circumstances atthese firms after the collapse of the bubble economy to a situation where labor demand isstagnant has been remarkable.
In addition, we observed the following results with regard to temporary employment.
4. Much temporary employment is being created by firms where full-time employment isincreasing, to the extent we can see based on number of employees the substitution of full-time
employment by temporary employment is not that great.
5. Looked at by number of firms a move to substitute using temporary employment is clearlyvisible, and during the latter half of the 1990s more than half of all firms that increased
temporary employment have been decreasing full-time employment.
6. This move towards this kind of job substitution can be most clearly seen at firms where theaverage age of employees is high or at firms where the average wage of employees is high.
Because the above results were deduced from an analysis of data that was limited to firmsthat are listed and publicly traded on a stock exchange, care should be prudently exercised when
applying these results to all Japanese firms. For example, although a result was derived from theresults of this paper showing that comparatively small-sized firms are increasing employment, thisdoes not mean that this result is applicable to all small and medium-sized firms in Japan. To
obtain this kind of result one must make a careful analysis using data for unlisted small andmedium-sized firms. There are also small firms of less than 100 employees among the listed andpublic traded firms as well, although only a handful when one looks at all Japanese firms, andmore attention should also be directed to those superior firms that have cleared the high hurdles
required to list and publicly trade their stock.
In addition to these considerations, the following implications can be reached. In order toimprove the Job Creation Rate, it will be important to cultivate young firms that possess strong
growth potential, promote the commercialization of creative and unique ideas through measures
such as deregulation, or create an environment that promotes new business start-up activity.
[Tanaka Kenji (E-mail: kntanak@dbj.go.jp)]
Development Bank of Japan Research Report/ No. 1031Appendix
1.

Sample Bias

For this paper we conducted an analysis focused on listed and publicly traded firms. Prudent
caution must be exercised when applying the analytical results to all firms in Japan because ofsample bias. The bias is particularly large in the case of firm size.
Commentary Figures 1-1 and 1-2 are charts that compare the composition of listed andpublic traded firms aggregated by number of employees to the composition for all Japanese firms.
For the data for all Japanese firms we used the Establishment and Enterprise Census from theManagement and Coordination Agency. When examined by the number of companies, morethan 90% of all Japanese firms are concentrated in the categories for less than 50 employees. In
contrast, among listed and publicly traded firms there are almost no firms with less than 50
employees, and approximately 40% of all listed and publicly traded firms are concentrated in the
300-999 employees category. When looked at by number of employees based on number of
employees per firm, in contrast to all Japanese firms where employees are distributed roughly
evenly across every category, at listed and publicly traded firms more than 50% of all employees
are concentrated in the category of firms with 5,000 or more employees.
Commentary Figure 1-1. Composition of Firms, Based on Number of Employees(Number of employees, individuals)
50002000-4999
1000-1999
300-999
100-299
50-99

Listed and publicly traded firms

Establishment and enterprise statistics

30-49
20-29
10-19
5-9
0-4
60

50

40

30

20

10

0

10
20
30
40
50
60
(Composition by number of companies, %)Development Bank of Japan Research Report/ No. 1033Commentary Figure 1-2. Composition of Employees, Based on Number of
Employees per Firm
(Number of employees, individuals)
50002000-4999
1000-1999
300-999
100-299
50-99

Listed and publicly traded firms

Establishment and enterprise statistics

30-49
20-29
10-19
5-9
0-4
60

50

40

30

20

10

0

10
20
30
40
50
60
(Composition by number of employees, %)Notes: 1. Based on Single-Unit and Head-Office Unit and Domestic Branch-Office by associating together or being legally
incompatible tabulation incorporated enterprises in Company Totals (Results of Incorporated Enterprises),
Establishment and Enterprise Census, Management and Coordination Agency
2. “Number of employees” indicates number of employees at fiscal year-end for listed and publicly traded companies,
and number of full-time employees for the business establishment and firms statistics.

2. The Job Destruction Rate Taking Business Bankruptcies and Shutdowns into
Account
The Job Creation Rate and Job Destruction Rate shown in Table 1-2 of this report are figures
derived for only firms that continued in business. Because the analysis was conducted within therange of listed and publicly traded firms it is not possible to analyze the growth of employmentthat accompanied new firm start-ups. It is possible, on the other hand, to grasp the decline in
employment that accompanied bankruptcies, business shutdowns or other causes based on thefollowing assumptions.
Assumption #1
Assumption #2

Treat all firms that ceased being publicly traded and were delisted, for reasons
such as legal proceedings including corporate reorganizations, or because of
the cessation of banking transactions, as bankrupt and terminated firms.
Treat the number of employees of these firms at fiscal year-end as job
destruction.

We added the job destruction that resulted based on these assumptions and determined the
Job Destruction Rate a second time. The results were as shown in Commentary Figure 2-1.
Because the number of cases of firms that went bankrupt or ceased business was not that
great and the size of bankrupt firms was also not very large up until Fiscal 1996, the difference
between the Job Destruction Rate for on-going firms only and the Job Destruction Rateconsidering bankruptcies or business shutdowns was not very large. From Fiscal 1997 onward,
however, the difference between both Rates widened because of the rise in bankruptcies and
34 Development Bank of Japan Research Report/ No. 10

business shutdowns as well as the occurrence of large-scale bankruptcies. In Fiscal 1998, the Job
Destruction Rate climbed by about 0.4% points when compared to the case that does not takebankruptcies and business shutdowns into consideration.
Commentary Figure 2-1. Job Destruction Rate When Bankruptcies and Business
Shutdowns are Considered（％）
4.0
Job Destruction Rate
3.5

When bankruptcies, shutdowns are taken into
consideration

3.0
2.5
2.0
1.5
1.0
0.5
0.0
78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98(Fiscal year)

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Development Bank of Japan Research Report/ No. 10

37

List of Back Numbers (Including JDB Research Report)
No.10
No.9
No.8

Job Creation and Job Destruction in Japan, 1978-1998: An Empirical Analysis Based on Enterprise Data
(This Issue)
Recent Trends in the Japanese Economy: Information Technology and the Economy, September 2000
Trend of International Reorganization Affecting the Japanese Automobile and Auto Parts Industries

No.7

Survey on Planned Capital Spending for Fiscal Years 1999 and 2000, May 2000

No.6

Current Status and Future Perspective of the Japanese Remediation Industry: Technology and Market for
Underground Remediation, May 2000

No.5

Recent Trends in the Japanese Economy: The 1990s in Retrospect, March 2000

No.4

Destabilized Consumption and the Post-bubble Consumer Environment, February 2000

No.3

The Slump in Plant and Equipment Investment in the 1990s: Focusing on Lowered Expectations, the Debt
Burden and Other Structural Factors, January 2000

No.2

Survey on Planned Capital Spending for Fiscal Years 1998, 1999 and 2000, November 1999

No.1

Corporate Strategies in Japan’s Semiconductor Industry: Implications of Development in Other AsianCountries, November 1999

JDB Research Report
No.96

Recent Trends in the Japanese Economy: Focused on Fixed Investment and Capital Stock, August 1999

No.95

Efforts to Protect the Natural Environment in the United States and Germany: Environmental Mitigation
and Biotope Conservation, July 1999

No.94

Survey on Planned Capital Spending for Fiscal Years 1998 and 1999, June 1999

No.93

Towards the realization of ‘environmental partnership’: A survey of Japan’s environmental NPO sector
through comparison with Germany, June 1999

No.92

The Impact of Demographic Changes on Consumption and Savings, March 1999

No.91

Recent Research and Development Trends in Japanese Enterprises: Technology Fusion, March 1999

No.90

Recent Trends in the Japanese Economy: Prolonged Balance Sheet Adjustment, January 1999

No.89

Impact of Asset Price Fluctuations on Household and Corporate Behavior: A Comparison between Japanand the U.S., December 1998

No.88

Survey on Planned Capital Spending for Fiscal Years 1997, 1998, and 1999, December 1998

No.87

Foreign Exchange Rate Fluctuations and Changes in the Input-Output Structure, November 1998

No.86

Structural Changes in Unemployment of Japan: An Approach from Labor Flow, November 1998

No.85

Recent Trends in the Japanese Economy: Characteristics of the Current Recession, August 1998

No.84

R&D Stock and Trade Structure in Japan, August 1998

No.83

Survey on Planned Capital Spending for Fiscal Years 1997 and 1998, August 1998

No.82

The Significance, Potential, and Problems of DNA Analysis Research: Establishing Public Acceptance isEssential, May 1998

No.81

The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996, 1997 and 1998
Conducted in August 1997, March 1998

No.80

Recent Trends in the Japanese Economy: Growth Base of the Japanese Economy, January 1998

No.79

Information Appliances: The Strength of Japanese Companies and Tasks for the Future, January 1998

38 Development Bank of Japan Research Report/ No. 10

No.78

Challenges and Outlook for the Japanese Machinery Industries: Impact of ISO14000 Series andEnvironmental Cost, January 1998

No.77

Current Conditions and Issues of Computerization in the Health Care Industry : For the Construction of a
Health Care Information Network, January 1998

No.76

Household Consumption and Saving in Japan, December 1997

No.75

The Direction of Japanese Distribution System Reforms: Strengthening the Infrastructure to Support
Diverse Consumer Choices, November 1997

No.74

Foreign Direct Investments by Japanese Manufacturing Industries and Their Effects on International Trade,
October 1997

No.73

The Impact of the Changing Trade Structure on the Japanese Economy: With Special Focus on the Effects
on Productivity and Employment, October 1997

No.72

An Analysis of Foreign Direct Investment and Foreign Affiliates in Japan, August 1997

No.71

Recent Trends in the Japanese Economy: Stock Replacement and New Demand as Aspects of Economic
Recovery, August 1997

No. 70 Corporate Fundraising : An International Comparison, June 1997
No. 69 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996 and 1997
Conducted in February 1997, May 1997
No. 68 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1996 and 1997
Conducted in August 1996, August 1997
No. 67 An International Comparison of Corporate Investment Behavior: Empirical Analysis Using Firm Date fromJapan, France and the US, April 1997
No. 66 Housing in the National Capital: Analysis of the Market for Housing using Micro Data, March 1997
No. 65 The Environment for Locating Business Operations in Major East Asian Cities, January 1997
No. 64 Direction of Reconstruction of Business Strategy in the Chemical Industry, January 1997
No. 63 Reflection on Discussions Concerning Regulation of the Electric Power Industry: Deregulation of theElectric Power Industry in Japan and Implication of Experiences in the United States, December 1996
No. 62 Current Status and Future Perspective of the Japanese Semiconductor Industry, November 1996
No. 61 A Breakthrough for the Japanese Software Industry?: Responsiveness to Users’ Needs is the key, October
1996
No. 60 Recent Trends in the Japanese Economy Focusing on the Characteristics and Sustainability of the Current
Economic Recovery, September 1996
No. 59 Analysis of the Primary Causes and Economic Effects of Information: Related investment in the UnitedStates and Trends in Japan, August 1996
No. 58 Selected Summaries of Research Reports: Published in FY 1995, June 1996
No. 57 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1995 and 1996
Conducted in February 1996, May 1996
No. 56 Recent Trends in the Japanese Economy, May 1996
No. 55 Issues Concerning the Competitiveness of the Japanese Steel Industry, February 1996
No. 54 Changes in the Financial Environment and the Real Economy, January 1996
No. 53 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1994, 1995 and 1996
Conducted in August 1995, October 1995

Development Bank of Japan Research Report/ No. 10

39

No. 52 Current Economic Trends: Focusing on the Appreciation of the Yen and its Effects, October 1995
No. 51 Problems Concerning the International Competitiveness of the Petrochemical Industry, October 1995
No. 50 An Economic Approach to International Competitiveness, October 1995
No. 49 Selected Summaries of Research Reports Published in FY 1994, July 1995
No. 48 Strategies for Improving the Efficiency of the Japanese Physical Distribution System: Part2, July 1995
No. 47 Issues on International Competitive Strength of the Auto Industry, June 1995
No. 46 Problems Concerning the International Competitiveness of the Electronics and Electric Machinery Industry,
June 1995
No. 45 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1994 and 1995
Conducted in March 1995, June 1995
No. 44 Strategies for Improving the Efficiency of the Japanese Physical Distribution System, March 1995
No. 43 Capital Spending Recovery Scenario Cycle and Structure, August 1994
No. 42 Progress of International Joint Development between Industrialized Countries on the Private Level, May
1994
No. 41 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1993, 1994 and 1995
Conducted in August 1994 , November 1994
No. 40 Selected Summaries of Research Reports Published in FY 1993, June 1994
No. 39 Recent Trends in Japan’s Foreign Accounts, April 1994
No. 38 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1993 and 1994
Conducted in March 1994, April 1994
No. 37 Economic Zones and East Asia Prospect for Economic Activity Oriented Market Integration, December
1993
No. 36 Japanese Corporate Responses to Global Environmental Issues, December 1993
No. 35 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1992, 1993 and 1994
Conducted in August 1993, September 1993
No. 34 Structure of Profit to Capital in the Manufacturing Industry, September 1993
No. 33 Comparison of the Japanese and The U.S. Labor Markets, October 1992
No. 32 The Relative Competitiveness of U.S., German, and Japanese Manufacturing, March 1993
No. 31 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1992 and 1993
Conducted in March 1993, April 1993
No. 30 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1991, 1992 and 1993
Conducted in August 1992, December 1992
No. 29 Flow of Funds in the 80s and Future Corporate Finance in Japan, November 1992
No. 28 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1991 and 1992
Conducted in February 1992, April 1992
No. 27 An Analysis of Foreign Direct Investment in Japan, March 1992
No. 26 Projection of Japan's Trade Surplus in 1995: Analysis of Japan's Trade Structure in the 80s, February 1992
No. 25 Intra-Industry Trade and Dynamic Development of The World Economy, November 1991
No. 24 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1990, 1991 and 1992
Conducted in August 1991, September 1991

40 Development Bank of Japan Research Report/ No. 10

No. 23 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1990 and 1991
Conducted in February 1991, March 1991
No. 22 Trends of the Petrochemical Industry and its Marketplace in East Asia, March 1991
No. 21 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1989, 1990 and 1991
Conducted in August1990,September 1990
No. 20 Deepening Economic Linkages in The Pacific Basin Region: Trade, Foreign Direct Investment andTechnology, September 1990
No. 19 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1989 and 1990
Conducted in February 1990, March 1990
No. 18 Petrochemicals In Japan, The US, and Korea an Assessment of Economic Efficiency, February 1990
No. 17 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1988, 1989 and 1990
Conducted in August 1989, October 1989
No. 16 Impact of the EC Unification on Japan’s Automobile and Electronics Industries, August 1989
No. 15 Industrial and Trade Structures and the International Competitiveness of Asia’s Newly Industrializing
Economies, August 1989
No. 14 The Japan Development Bank Reports on Capital Investment Spending: Survey for Fiscal Years 1988 and1989 Conducted in February 1989, March 1989
No. 13 The Japan Development Bank Reports on Capital Spending: Survey for Fiscal Years 1987, 1988 and 1989
Conducted in August 1988, September 1988
No. 12 Growing Foreign Investors’ Activities and the Future of Internationalization, September 1988
No. 11 Futures Tasks and Prospects for the Japanese Machine-Tool Industry, July 1988
No. 10 International Division of Labor in the Machine Industries Among Japan, Asia’s NICs and ASEANCountries, June 1988
No. 9

Trends of the Petrochemical Industry and its Marketplace in East Asia around Japan, May 1988

No. 8

The International Competitiveness of Japan and U.S. in High Technology Industries, April 1988

No. 7

The Japan Development Bank Reports on Private Fixed Investment in Japan, March 1988

No. 6

Economic Projections of the Japan’s Economy to the Year 2000, February 1988

No. 5

The Japan Development Bank Reports on Private Fixed Investment in Japan, September 1987

No. 4

Current Trends in the Japanese Auto Parts Industry in Overseas Production, July 1987

No. 3

Current Moves for Foreign Direct Investment into Japan, May 1987

No. 2

Overseas Direct Investments by Japanese Corporations, May 1987

No. 1

Current U.S. Consumption Trends, May 1987

Development Bank of Japan Research Report/ No. 1041