Mark Rebick’s Memorial and Hope in Japan*
ISS Discussion Paper Series
F-176
June 2015

Yuji Genda
The University of Tokyo* This paper was prepared for the Nissan Seminar “Memorial Event to Commemorate theWork and Influence of Dr Mark Rebick” at Nissan Institute of Japanese Studies, University of
Oxford on June 16th 2015.
For the bibliography of Marcus E Rebick, see as follows: https://ideas.repec.org/e/pre111.html

Dr. Marcus E Rebick was a very noble-hearted researcher who deeply understood the Japanese
economy and its labour market. It was during his undergraduate years that Mark initially became
interested in Japan. Mark was born in Canada on January 19, 1956 and studied geological science at
Harvard University. He visited South Korea and Japan at that time and has said that he took an interestin Japan from that first experience.
After obtaining his bachelor’s degree from Harvard, he returned to Canada and worked for awhile as a geologist. However, he decided to go to the graduate school of economics at the Universityof Toronto in 1982 and returned to Harvard in 1984. There, his main research advisor was Professor
Richard Freeman, at the time the most influential labour economist in the United States. Mark obtained
his Ph.D. in economics in 1990, when the Japanese economy was flourishing dramatically andattracting worldwide attention. This was when Mark Rebick started his academic life as an empiricallabour economist specialising in the Japanese economy.
In 1992, Mark was invited to be a Shimomura Fellow at the Japan Development Bank in Tokyo.
I was then a graduate student at the University of Tokyo, working as a research assistant there. I met
Mark then and had my first stimulating discussions with him. Mark had experienced the world of upto-date and critical economic studies of labour issues including inequality that had rapidly developed,
especially in the United States. Mark appeared brilliant to me because he had mastered the skills ofcontemporary labour economics.
1

It is quite difficult for me to describe Mark in a word. If I were to venture, however, I would
say I have never seen such a modest person as Mark Rebick. Mark was always graceful, always patient.
It was unlike him ever to speak out loudly to justify his opinions. I think his unwavering confidence
in his own research enabled Mark to behave peacefully and thoughtfully at all times.

On the other hand, Mark was always dissatisfied about one particular issue when he tried to
examine the Japanese labour market empirically. It was the restriction on the use and provision of
micro data in Japan. While several economic studies used micro data provided by the Japanese
government in the 1990s, access was restricted to a limited number of domestic researchers andresearch projects. In fact, it was quite hard for Mark to access micro data that were suitable for his
research. I remember that he therefore borrowed so many volumes of published figures from libraries
and made the effort to capture these data by himself.
Now, as the Statistics Law in Japan was revised in 2007, many researchers have had easieraccess to these micro data. I truly expected Mark to utilize this opportunity to his heart’s content andreveal certain original and important facts that others have yet to discover. I am very sorry that such achance cannot now be taken.
Mark became a University Lecturer at Saint Antony’s College and the Nissan Institute ofJapanese Studies in 1994. Mark contributed to providing many Japanese the opportunity for studying
at Oxford. Thanks to Mark, I also had a chance to be a visiting researcher at the Nissan Institute in
1996. However, I enjoyed living in Oxford too much. At that time, there was a tennis court next to thistheatre in the grounds of St Antony’s College. I played tennis almost every day in summer and enjoyed
not a few pints of beer at the pub like Gardener Arms and Rose and Crown. I remember Mark saying
to me with a little smile, ‘Yuji, are you studying in Oxford to be a tennis player like Kimiko Date?’(Fig 1)

Mark had also enjoyed long stays in Japan as a visiting researcher at Nagoya University in 1996
and at Gakushuin University in 1998. He often visited Japan until the beginning of the 2000s. Mark
had so many friends in Japan, and they missed him so much.
The Japanese Journal of Labour Studies is an academic journal that is referenced by most labour
researchers and labour policy makers in Japan. The lead article of the journal published in May 2015
was a memorial dedicated to Dr. Marcus E. Rebick, which the editorial board asked me to prepare.
Such a testimonial from the journal is quite rare, indicating how much Mark was loved and missed byhis Japanese colleagues.
It was March 2012 when I last saw Mark in person. A year had passed since the Great East
Japan Earthquake, and a Memorial conference was kindly held in Oxford. I joined the conference and2was told by Professor Takehiko Kariya that Mark had worked hard to plan the conference in spite ofhis serious health condition. I saw Mark on the final day of the conference. We were meeting after along time, and indeed, he seemed thin with illness, but the sharp yet warm look on his face wascompletely the same as when I saw him 20 years previously for the first time.

Mark could not produce all that many publications in his academic career, but he bequeathedseveral important works to us from which we will need to learn to succeed in the future.

(Fig 2)

One such example is his detailed empirical study of the persistent wage differentials between
large firms and middle- and small-sized firms. The firm size wage differential has not received muchattention recently, but it is becoming more and more likely to emerge again as a quite central issue.
So-called deflation has been continuing since the end of the 1990s in Japan. As to its main cause, mosteconomists agree that it is due to the fact that the real wage has not been increasing at all; in the longrun, the real wage tends especially to decline among small firms.
Since the 2000s, the Japanese economy has repeated the cycle of recessions and booms. The
Job Opening Application Ratio refers to the number of job openings by firms relative to job
applications by unemployed persons. The job opening application ratio has been steadily improving
since the end of the global financial crisis and the big earthquake. Economic theory says that the real
wage always increases with labour shortages. However, the real wage has been stable or even gradually
declining since the 2000s. This is the fundamental reason why the Japanese economy cannot escapefrom the pattern of long run deflation.
In the past, John Maynard Keynes pointed out two important reasons for the substantial increasein unemployment during the Great Depression in the 1920s. One was the lack of aggregate demand in
the economy, which made it difficult to get out of depression without a substantial increase in public
expenditure achieved through financial policies. The other main reason was the downward rigidity ofwages in spite of the excess labour supply. As long as the real wage remained high, firms could not
expand labour demand, meaning that involuntary unemployment could not disappear from the labour
market.
On the other hand, the opposite phenomenon to that supposed by Keynes has newly occurred
during the deflation in the 2000s in Japan; that is, the upward rigidity of wages in spite of excess labourdemand. This cannot be explained by neoclassical or Keynesian economics; it is not a situation
expected by existing economic theory. Such a phenomenon may also occur in Europe and the UnitedStates as serious deflation would continue into the future.
Why did the real wage not increase, despite there being substantial labour shortages in Japan?
3

According to Japanese experts like Mark Rebick, the Japanese employment system is well known to
be characterized by its long-term employment practices, seniority wage rules, and firm-based labour
unions. These features are especially developed among large firms in Japan. However, most Japaneseemployees actually belong to small or medium-sized firms rather than large ones. Recently, the wages
paid by large firms has tended to increase in Japan, because their business performance has steadily
recovered due to exchange rate depreciation and increasing stock prices. In contrast, there are almost
no indications that wages have gone up in small and medium-sized firms at least now. While labour
shortages – especially of young workers – are quite serious issues for small businesses, their wage
payments have almost failed to rise at all.
Why does the wage not go up especially in small and medium firms, in spite of substantial
labour shortages in Japan? Is this due to increases in non-regular workers? A stagnation of growth inlabour productivity? The potential pressure of a huge labour supply of aged workers? Or the strict
regulation of wage payments for workers in the caring industry, which is growing rapidly with thedevelopment of an aging society in Japan? We have not yet found clear reasons for the upward wage
rigidity in small and medium firms in Japan.
In 1993, Mark Rebick published an important paper titled ‘The Persistence of Firm-Size
Earnings Differentials and Labor Market Segmentation in Japan’ in the Journal of the Japanese andInternational Economies. He examined the reasons for substantial firm-sized wage differentials in
detail, using data published between 1970 to 1990 which he collected himself. He found the mostimportant cause to be the segmentation of the dual labour market. At the same time, he also pointed
out that if the unemployment rate fell by 1 percentage point over this period, the wages of small andmedium-sized firms tended to increase by 8 percentage points. I have an impression that the current
relationship between wages and employment may be quite different from anything that Mark had
examined previously. For example, the unemployment rate fell by almost 2 percent point from 2002
to 2014, but the real wage did not raise almost at all. Nonetheless, I am sure that we need to learn a lot
from Mark’s insightful legacy of research into people who face difficulties with low wages andprecarious employment in small and medium-sized firms.

(Fig 3)
Mark Rebick left one long-term important book through his academic work. It is ‘The Japanese
Employment System: Adapting to a New Economic Environment’, published by Oxford University
Press in 2005. It is the outcome of Mark’s comprehensive examination of possible structural changes
in the Japanese economy and its labour market from the 1980s to the beginning of the 2000s. He
argued the cases for several persistent changes, such as the difficulty of youth employment, theutilization of non-regular employment, the limited improvement in levels of female employment, and4other issues.
He also advocated the necessity to take prompt measures to cope with shortages in the labour
force due to a declining population. While such a suggestion appears to be a matter of course nowadays,
it was Mark’s foresight to point this out in 2005, when labour surpluses were still believed to be aserious continuing issue.

(Fig 4)

In addition, Mark asserted the importance of maintaining the cooperative industrial relationshipthat has developed historically within Japanese firms, generating the prevailing formation of skilledworkers. In 2000, Mark was interviewed by the Nihon Keizai Shimbun, and commented as follows:‘The competitiveness of Japanese firms is attributed to their excellent labour forces. There are fulltraining systems within firms, Japanese employees cooperate with each other, and they make efforts
to improve their productivity with a strong sense of responsibility. Indeed, it is hard to express suchloyalty and responsibility in numerical form, but they are the secret behind the power of Japanesefirms without any doubt, and many Japanese firms have not yet lost this advantage.’
I believe that Mark would have liked to examine for himself whether his hypothesis hasremained appropriate since the 2000s. What was the essential change in the Japanese labour market
and employment system after the 2000s, when we experienced so many huge confusions in theeconomy? What has changed permanently? And, consequently, what has not changed?
I do not think that we labour experts and Japanese specialists have generalized these facts
sufficiently. Compared with past events such as the oil shock of 1973, the rapid appreciation of theexchange rate in 1985, and the financial crisis in 1998, it is quite strange as to why we have not put ahistorical name to the worst of the employment crisis that occurred in 2002 and 2003. To do so, weneed to build on Mark’s research to pursue the ideal employment system and labour market.

In the rest of the time available, I would like to talk about some changes in contemporary
Japanese society, having been stimulated by Mark’s ideas. It is a story about ‘hope’ in Japan comparedwith other countries.

(Fig 5)‘Do you have ‘hopes’ in the sense of things you want to realize in the future?’ I have executeda series of surveys including such questions to those aged between 20 and 59 in Japan. In 2006, 78 percent of respondents answered ‘yes’ to this question. The proportion replying ‘yes’ fell to 70 per centin January 2011; it declined further to 55 per cent in 2014.
5

The Institute of Social Science, University of Tokyo, also conducted a panel survey that
followed a group of respondents who were aged between 20 and 39 in 2007. The panel survey asked
every year if the respondents had any hopes for their future lives and works. The proportion expressing
hope was 55 per cent in 2007, but it fell continuously to 39 per cent in 2012.
I am surely proud that Japan continues to be a very lovely country. For example, income
variation has been quite equalized and Tom Piketty’s story of enlarging inequality has not been held
true historically in case of Japan. The unemployment rate is low at international standard, and thecrime rate is also low especially among youths. Life is very comfortable and most people are satisfied
with every day life. Food is safe and delicious, and people are still kind in general. I am sure Mark
will love Japan still now as he first met the Japanese society when he was a young student.
But these results suggest that Japan has been now started to become a country in which people
do not have any hopes for the future.

(Fig 6)

How about other countries? We attempted an international survey of those aged between 20 and
59 in various countries in 2014, also asking respondents if they had ‘hopes’ in the sense of things theywanted to realize in the future. The proportion answering that they hoped for something in the future
was 87 per cent in the United Kingdom, 93 per cent in the United States, and 89 per cent in Australia.
We did similar surveys this year, and the proportions are 97 per cent in Germany, 93 per cent in China,
and 87 per cent in South Korea. Most people express hopes of realizing something in the future inthese countries.
Compared with these results, however, the fact that only 54 per cent of the population in Japan
express hopes is quite surprising. That is, Japan is now a quite unusual country in which not a few
people appear to have lost hope for some reason.

What is the difference between people who hope for something and those who do not? Several
statistical investigations have clarified some objective facts regarding this issue.
First, age is closely related to the sense of hope. Generally, younger people tend to hope moreto achieve some aim than do older ones. What is the most important factor in realizing hopes? I think
it is ‘time’. Time is a most valuable resource, and it is granted more extensively to the young. The
youth are granted the privilege of rising to the challenge of realizing their own hopes by utilizing theplentiful time at their disposal. Therefore, it is a serious issue that even young Japanese are now
tending to lose their sense of hope.
Second, education plays a crucial role in having hopes. It is found that college graduates are
more likely to have hopes than those who only graduated from high school in Japan. The accumulation6

of skills and knowledge acquired through education enables more highly educated people to enlarge
their choices and possibilities, resulting in them having greater hopes. Third, health is an importantcondition in order to realize hopes. Illnesses and injuries limit the extent of people’s activities andhinder their hopes.
These facts mean that a progressively aging society inevitably experiences a decrease in thegeneral sense of hope. The existence of both fewer young people and more older patients in poor
conditions of health implies an increasing relative number of those who lack hope in the future.
There is one more important objective determinant of hope. That is the ‘job’. Those having a
job tend to have more hope for the future than do non-employed persons. Employment provides theearnings necessary for people to realize their hopes; at the same time, hope itself can be realized
through working at a job.
The annual unemployment rate in Japan recorded its lowest level in 2014 since the financial
recession of 1998. A situation in which jobs are available for everyone is quite crucial in order toenlarge hopes in any society. In this sense, the labour issues that Mark Rebick persistently emphasized
will continue to be taken seriously in discussing hope and happiness in society.

(Fig 7)‘Do you think you have many friends?’
With respect to the above question, 38 per cent of people in the United States replied that they
had many friends. 32 per cent in the United Kingdom, 25 per cent in China, and 21 per cent in South
Korea answered that they had many friends.
How about Japan?
Surprisingly, just 8 per cent of Japanese respondents said that they had many friends. Fromempirical studies, the number of friends and acquaintances a person has will exert a significant positive
impact on their hopes to be realized in the future. The relative lack of hope in Japan appears to bemainly due to this poor relationship with friends and acquaintances.
Hopes can be found in communication with others rather than in thinking by oneself.
Furthermore, hopes can be realized through support and cooperation with others in situations wherethese hopes cannot by achieved by acting alone. Such social capital, created by intimate human
networks, plays a crucial role in generating hope in society. Just after the Great East Japan Earthquake,the kizuna or social bond became the buzzword all across Japan. In contrast, however, I have an
impression that Japanese people tend to be alone more and more.
Probably the most important reason for such loneliness is ‘crumbling pillar’ of the internal firm
relationship between corporate colleagues. This hypothesis of declining trust between workers in firms
should be examined in detal, according to the important paper by Freeman and Rebick titled7

“Crumbling Pillar? Declining Union Density in Japan,” published in 1989.

Another important feature of hope is that people who tend to avoid futile efforts are less likely
to hope for the future.
Of course, everyone would like to avoid bad deals while ensuring their best interests. It isnecessary to have appropriate information in order to judge precisely what is a loss and what is again, but information is not always sufficient. In particular, it is so often the case that we only havequite limited information as to what will happen in the future. Therefore, even if we make an effort
towards achieving some desired goal, we sometimes fail to have great success.
On the other hand, many experienced persons will often talk about their careers as follows: ‘I
have lived through so many things and I have made so many mistakes. But looking back at my whole
life, there is nothing that was completely in vain.’ Such persons are always youthful and fresh,
regardless of their real age, and they always hope to rise to the challenges of life. They are ‘people
with hope’ in the real sense.
This kind of passion is indispensable in maintaining hope against an uncertain future. Suchpassion is close to the ‘animal spirit’ to which John Maynard Keynes referred in his General Theory.
The animal spirit is an essential factor in activating the long-term expectations that determine aperson’s investments of time and energy.
However, I have the impression that the animal spirit or passion is gradually declining inJapanese society after the burst of bubble economy, so that not a few Japanese have lost hope in theirown future. Now, the accumulated financial deficit has become a serious problem in Japan. Therefore,
efficiency is believed to be the most important issue and cutting waste is stressed in all cases in allareas. However, beyond efficiency, animal spirit is also necessary for the development of hope andlong-term growth in Japanese society, I believe.

(Fig 8)So many Japanese suffered from the Great East Japan Earthquake in March 11th 2011. The
damage was not limited just to the direct disaster areas of the tsunami and the nuclear power plant
accidents, but has been prevalent across the whole of Japan. What kinds of impact on hope, then, has
the earthquake had among the Japanese?
According to the survey of 20 to 59 year old persons living in the Tohoku and Kanto areas, theeast side of Japan, those who were damaged by the disaster to some extent are most likely to act torealize their hopes. The proportion of these people acting to realize their hopes was 48 per cent; thisis higher by almost 10 per cent compared with those who were not damaged by the disaster at all.
However, we must never forget that most of those who cannot recover from serious damage are8still losing hope in future. We need to be careful in that there is a substantial differential in hope under
the recovery process from the disaster due to the differing degrees of damage experienced.
Changes can also be observed in the main contents of hope after the Great East Japan
Earthquake. Before the disaster occurred, the most frequent component of hope in Japanese society
was always ‘working’. For example, many Japanese hoped to work in worthwhile jobs and to havestable employment with high earnings; many Japanese females hoped to work after bringing up theirchildren. Hopes among the Japanese had been mainly related to employment in the past.
However, the expressed content of hope that is increasing the most since the earthquake is the‘family’ issue. Many Japanese now hope to spend much more time with their family rather than towork long for companies. What they all hope for the most is that the well-being of their family
members is as great as possible. Faced with the difficulty of losing one’s family all at once in such adisaster, what is emerging as the most important issue among the many possible contents of hope isthat of family rather than that of employment.
However, at the same time, it is becoming more and more difficult for Japanese youth to marryand have their own children, mainly because of precarious employment opportunities with low
incomes. From the viewpoint of hope in Japan, it is most crucial for the youth to be able to have theirown families in the future.

(Fig 9)In fact, the number of people with hopes for their own lives in the future is declining in Japan.
The development of the aged society, the increase in the number of solitary persons, and theweakening interest in employment can partly explain the decline in hope in Japan.
However, in contrast with the loss of hope of their own lives and works, another change is now
occurring with respect to the issue of hope. In the survey, we asked respondents if they felt thatJapanese society would be hopeful in future. The proportion of those who replied that Japanese society
would be hopeful was limited to 10 per cent in 2011. However, it has tended to rise and reached 23
per cent in 2014.
Who among the Japanese feels now that Japanese society will be hopeful in the future?

(Fig 10)First, those who currently support the Liberal Democratic Party feel that hope is increasing inJapanese society. In particular, they hope to improve conditions by the change of political regime fromthe Democratic Party of Japan to the LDP in 2012.
Second, those owning stocks tend have greater hope in Japanese society. Stock prices are now
9increasing due to the recovery of business performance achieved through mass monetary easing andthe depreciation of the exchange rate. Therefore, stockholders hope for further improvements in theJapanese economy.
On the other hand, I have one troubling observation. It is the fact that those Japanese who do
not like China tend to have increased hope for Japanese society in the future. At the same time, theappreciation of China is drastically declining in Japan.
It appears desirable that hopes are expanding in society, but we must avoid warlike and tense
situations with neighbouring countries from becoming a source of social hope among the Japanese.
Rather, we now need much more discussion on what the real and ideal hopes in society should be.

As Mark Rebick highlighted, Japanese society and its economy are still engaged in a long andsubstantial transition, with further globalization and population aging ahead. Mark did not seem toapprove of the execution of drastic revolutionary measures in order to solve the related problems all
at once. We should especially avoid creating tense situations within our international neighbourhood
through accelerated solutions. Conflicts should not be the hope at any time.

(Fig 11)

We need rather to share our responses to these multiple changes and to trust each other. We
should hope for a future that will not be so miserable and work to make steady and gradual progress.
According to Mark’s insightful studies, we would do well to investigate the best ways of improving
the situation with sympathy for relatively disadvantaged persons such as females, youths, non-regulars,
and older persons in Japan.
Marcus E Rebick was a social scientist who truly embodied the ‘cool head but warm heart’ that
Alfred Marshall suggested as characterising the ideal economist. Mark, you understood Japanesesociety in depth and you were an exceptional labour economist.
Please sleep safely. Thank you.

10

Fig 1.

日本経済新聞（2015 年 4 月 27 日）
Nihon Keizai Shimbun

11

Fig 2.

Real Wage Not Increase
In Spite of Economic
Recovery3

12Fig3.

413

Fig 4.

日本経済新聞(2000年5月1日)
Nihon Keizai Shimbun

5

14

Fig 5.
(%)
I feel Income Inequality
is too large in JapanI am totally satisfied witheveryday life.

I have hopes for my future life
and works
Lives will be worsened after
10 years

2675 respondents aged
Between 20 and 39.

From Institute of Social Science (ISS)The University of Tokyo, 2012
(Year)

15

6

Fig 6.

(%)

7

16

Fig 7.

8

17

Fig 8.

Fig 2 Which hope is the most imporant to you? (%)

Work
Relation with friend
Bein in love
Social contribution
Marriage
HealthPlay (entertainment)
Appearance
Learning (Study)
FamilyLocal activity
Other
Nothing

BeforeAfterEarthquake Earthquake
16.4
15.8
0.9
0.8
4.2
2.6
0.7
1.1
5.2
7.2
2.2
4.8
3.7
3.8
0.4
0.7
2.1
1.3
10.8
21.1
0.2
0.3
1.5
1.9
51.8
38.7

Genda (2014)
918

Fig 9.

Ａｒｉｔａ(2015)10

19

Fig 10.

Who Increases the Hope for
the Japanese Society?
Male
FemaleSupport LDP

Support DPJ

Stock Owners

OthersWorse Feel for China
OthersDecreasing Hope

Increasing Hope

No Change

20

11Fig 11.

According to Mark’s insightful studies,
we would do well to investigate
the best ways of improving the situation
with sympathy for
relatively disadvantaged persons.
1221