Monthly Labor Review April 2002 25

Labor Resources in Japan and the U.S.

Studies comparing unemployment rates in

the United States and Japan on the basis of

pre-1994 U.S. definitions and concepts of

unemployment have engendered considerable debate concerning procedures for adjusting the

rates for comparability across national boundaries. The debate can be boiled down into the

following two points: (1) Japan’s official unemployment rate was being understated because the

Japanese definition of unemployment was quite

different from those of other developed countries.

(2) Japan’s expanded unemployment rate, in which

the scope of unemployment was enlarged to include other forms of labor underutilization, was

relatively high among developed countries, compared with its low official unemployment rates.

In opposition to the first argument, many labor

economists asserted that Japan’s official unemployment rate was changed only slightly by adjustments based on U.S. definitions and concepts

and that the rate was well below the U.S. official

unemployment rate even after the adjustment.

These same economists agreed, however, with

the second argument and recognized that Japan’s

labor market was not as efficient as the official

unemployment rate indicated. The reason for this

gap, they maintained, was the existence of a relatively large degree of slack in the labor pool, consisting of workers who were pushed into hidden

unemployment during recessions (for example,

Utilization of labor resources

in Japan and the United States

On the basis of U.S. definitions, Japan’s unemployment rate

surpassed the U.S. rate for the first time in 2000;

expanded measures show a much greater gap

between the two countries’ underutilization rates

Toshihiko Yamagami

Toshihiko Yamagami is

a senior economist at

the Sumitomo Life

Research Institute,

Tokyo, Japan.

discouraged workers).

During the decade of the 1990s, economic conditions in both the United States and Japan

changed dramatically. At the beginning of 2001,

the U.S. economy had experienced a long-term

expansion that began in March 1991,1 and the

official unemployment rate had fallen during that

period, to just over 4 percent. By contrast, Japan’s

economy has experienced an extended downturn

since 1991, when the asset bubble burst,2 and

although it underwent a small cyclical upturn from

1994 to 1997, it again turned downward from 1997

to 1999.3 It is often said that this long-term recession was caused by the fall of real-estate and

stock prices and a reduction in lending by financial institutions.

Japan’s official unemployment rate has soared

during the same period. At the beginning of 2001,

it was approaching 5 percent, a figure higher than

the official U.S. unemployment rate at the time.

Reflecting the long-term downturn of Japan’s

economy, “restructuring” within Japanese industries has brought higher unemployment, especially

among white-collar workers.4 Some Japanese

economists argue that the country’s well-known

“long-term employment system”5 can no longer be

sustained and that job security went by the wayside during the past decade.

Still, no rigorous comparison has been made

of unemployment rates in these countries on the
Labor Resources in Japan and the U.S.

26 Monthly Labor Review April 2002

Survey complements the Regular Survey by interviewing persons outside the labor force and provides more detailed information on their desire to work, reasons for giving up their job

search, and past jobseeking activities.

Many labor economists used to worry that the results for

February might not match those for another month, because

February is on the near end of both the Japanese fiscal year

and the country’s school year. It is possible to adjust Japan’s

unemployment rates for August by using data from the Special Surveys of 1999 and 2000, so, at least for those years, the

results of February and August can be compared.10 Such a

comparison indicates that no serious differences exist. Therefore, the February results are just as valid as the August ones,

and they are used in this analysis.11

In contrast, it is impossible to adjust the official U.S. unemployment rate to Japan’s definitions and concepts. In order to

make such an adjustment, more detailed questions concerning jobseeking activities by unemployed persons in the most

recent week and past job applications by persons outside the

labor force would need to be added to the CPS questionnaire.

Supplementary unemployment rates. In the United States, in

addition to the official unemployment rate, supplementary

measures of labor underutilization are constructed regularly on

the basis of the CPS. These measures, originally labeled U–1

through U–7, were reported every quarter from 1976 through

1993. U–6 takes account of persons working part time for economic reasons, while U–7 encompasses discouraged workers.

Their content is shown in exhibit A–1 in the appendix.12

The seven alternative measures were replaced by six (U–1

through U–6) in October 1995. These six measures are reported every month in the CPS results. Their content is shown

in exhibit 2.13 Only U–3 through U–6 are considered in this

article. U–3 is the official U.S. unemployment rate, while U–4,

U–5, and U–6 successively add discouraged workers, all other

“marginally attached” workers, and persons working part time

for economic reasons.

Under the 1994 CPS revision, the definition of “discouraged workers” was changed, and a new concept of workers

“marginally attached” to the labor force was introduced. The

former and current definitions of “discouraged workers” are

presented in exhibit 3, as is the definition of “marginally attached workers.”

In Japan, supplementary measures of unemployment rates

such as U–1 through U–6 are not reported regularly or officially in either the Regular Survey or the Special Survey, because the concepts of discouraged workers, marginally attached workers, and persons working part time for economic

reasons are not used officially.

Discouraged workers (added at U–4). According to the

earlier definition, discouraged workers were persons outside

basis of the 1994 revisions to U.S. definitions and concepts. It

may be that changes in the U.S. definition of unemployment

will have a large impact on the comparison. Furthermore, the

U.S. definitions of the expanded measures of unemployment,

U–1 through U–6, were changed in 1995, and no comparisons

have been made on the basis of these new concepts. The

analysis presented in this article builds upon earlier work by

Constance Sorrentino published in the Review; a synopsis of

Sorrentino’s findings for the pre-1994 period is given in the

appendix.

In this article, data used in both countries are described,

and a brief outline of the revisions to the U.S. Current Population Survey (CPS) is given. Next, Japan’s unemployment rates

(including expanded ones) are adjusted to conform with current U.S. definitions and concepts, and the U.S. and Japanese

rates are compared. Finally, the underutilization of Japan’s

labor resources and its implications on the structure of the

labor market are examined.

Data resources and CPS revisions

Official unemployment rate. In the United States, the official unemployment rate is reported every month by the Bureau of Labor Statistics, based on data collected in the CPS.

6

The latest revisions to the CPS were carried out in 1994.7 The

revisions introduced had only a minor impact on the U.S.

unemployment rate, even though some definitions, the questionnaires, and the data collection methods were revised markedly. Both the former and current definitions of unemployment are shown in exhibit 1.

In Japan, the official unemployment rate is reported every

month in the Labor Force Survey (hereafter, “Regular Survey”) conducted monthly by the Statistics Bureau of the Ministry of Public Management, Home Affairs, Posts and Telecommunications.8 The official definition of unemployment in

Japan also is shown in exhibit 1.

Two methods of adjustment might be used to compare official unemployment rates in the United States and Japan. In

one, Japan’s official unemployment rate would be adjusted to

match the U.S. definitions and concepts; in the other, the U.S.

official unemployment rate would be adjusted to match

Japan’s. The latter adjustment, however, is not possible.

The Japanese Regular Survey’s questionnaire is not a parallel of the CPS survey and is not sufficient to adjust Japan’s

official unemployment rate to U.S. definitions and concepts.

Therefore, the results of the Regular Survey do not facilitate

any meaningful comparison. Accordingly, to adjust the Japanese unemployment rate to U.S. Concepts, it is necessary to

use data from the Special Survey of the Labor Force Survey

(hereafter, the “Special Survey”), conducted in February and

August every year by the Statistics Bureau.9 The Special
Monthly Labor Review April 2002 27

Definitions and concepts before 1994 CPS revision:

Persons who are not working, but who are currently available for work and who actively sought a job within the last

4 weeks

Persons who are on layoff

Persons who are waiting to start a new job within 30 days

and are currently available for work

Definitions and concepts after 1994 CPS revision:

Persons who are not working, but who are currently available for work and who actively sought a job within the last

4 weeks, including persons who are waiting to start a new

job within 30 days and who have searched for work within

the last 4 weeks.

Persons who are on layoff

Comparison of definitions and concepts of official unemployment

in the United States and Japan

 United States Japan

Persons who are not working at all in the reference week,

but who are currently available for work and who actively

sought a job in the reference week

Persons who are awaiting evaulation of previous employment applications

SOURCE: U.S. information from Sharon R. Cohany, Anne E. Polivka, and Jennifer M. Rothgeb, “Revisions in the Current Population Survey

Effective January 1994,” Employment and Earnings, January 1994, pp. 13–35; Japanese information from Labor Force Survey, Statistics

Bureau, Tokyo.

Rate Definition

U–1 Long-duration unemployment rate:

Persons unemployed 15 or more weeks ÷ civilian

labor force

U–2 Job loser rate:

 Job losers + persons who completed temporary

jobs ÷ civilian labor force

U–3 Official unemployment rate:

 Total unemployed persons ÷ civilian labor force

U–4 Rate adding discouraged workers:

Total unemployed persons + discouraged workers ÷ civilian labor force + discouraged workers

Exhibit 2. Alternative measures of unemployment and other forms of labor

 resource underutilization, U–1 through U–6

Rate Definition

U–5 Rate adding marginally attached workers:

Total unemployed persons + discouraged workers

+ all other marginally attached workers

÷ civilian labor force + all marginally attached

workers

U–6 Rate encompassing persons working part time for

economic reasons:

Total unemployed persons + all marginally

attached workers + persons working part time

 for economic reasons ÷ civilian labor force + all

 marginally attached workers

SOURCE: John E. Bregger and Steven E. Haugen, “BLS introduces new range of alternative unemployment measures,” Monthly Labor

Review, October 1995, pp. 19–26.

the labor force who wanted to work and who gave market-related reasons for giving up their job search; their availability for

a job was presupposed. Many, however, criticized this definition. The most frequent criticism was that measuring the number

of discouraged workers involves subjective criteria. In other

words, one’s desire for work and one’s perceptions of the chance

of finding a job are subjective matters and depend on the

respondent’s state of mind.14 The critics doubted that all discouraged workers were strongly attached to the labor market.15

The objective in changing the definition of “discouraged

workers” was to lessen the subjectivity and arbitrariness of

the measure. Under the new definition, for persons to be

classified as discouraged, they must state explicitly that they

are currently available for work, and they must have engaged

in some job search activities within the past year. In addition,

they must more explicitly satisfy the conditions required in

the former definition. To confirm whether a person outside

the labor force who desires work is currently available for a

Exhibit 1.
Labor Resources in Japan and the U.S.

28 Monthly Labor Review April 2002

job, the person is asked, “Last week, could you have started a

job if one had been offered?” Formerly, the person’s availability was inferred from responses to other questions.

The impact of the revisions on estimates of the number

and nature of discouraged workers was quite large. The estimated number of discouraged workers was reduced by approximately half, and the individuals remaining were judged

to be those more closely attached to the labor market.16

Marginally attached workers (added at U–5). Discouraged workers are a subset of a larger group of workers who

are not in the labor force, but who are considered marginally

attached to the labor market. This larger group, described

simply as “marginally attached workers,” consists of persons outside the labor force who desire to work, who are

currently available for a job, who have searched for a job in

the past year, and who give either job market-related reasons

or other reasons (such as the unavailability of child care) for

abandoning their job search.

Part time for economic reasons (added at U–6). Before

the 1994 CPS revisions, for part-time workers to be classified

as persons working part time for economic reasons, they had

to be deemed desirous of, and currently available for, fulltime work, but without having had any explicit test of either

their desire or their availability for work. After the revisions, it

became possible to test these individuals’ desire and availability for work explicitly with a redesigned questionnaire.

The objective of such explicit testing is to minimize the subjectivity and arbitrariness of the measure.

 Category Former definition Current definition

 Discouraged

 workers

Marginally

attached workers

SOURCE: Sharon R. Cohany, Anne E. Polivka, and Jennifer M. Rothgeb, “Revisions in the Current Population Survey Effective January

1994,” Employment and Earnings, January 1994, pp. 13–35.

Comparison of former and current definitions of expanded

unemployment

Persons who are not currently looking

for a job because they feel that their

search would be in vain, based on the

following job-market-related reasons

(believes no work available in line of

work or geographical area; could not

find any work; lacks necessary schooling, training, skills, or experience; employer thinks applicant is too young

or too old; other typical discrimination) and who want and are available

for work

None Discouraged workers, plus other marginally attached workers, defined as persons who are not currently looking for a

job because they feel that their search

would be in vain, based on the following

other-than-job-market-related reasons

(reasons such as child care problems,

family responsibilities, and transportation problems), who explicitly want and

are currently available for work, and who

have searched for work in the previous

year (except the previous 4 weeks)

Persons who are not currently looking for a

job because they feel that their search

would be in vain, based on the following

job-market-related reasons (believes no

work available in line of work or geographical area; could not find any work;

lacks necessary schooling, training,

skills, or experience; employer thinks applicant is too young or too old; other typical discrimination), who explicitly want

and are currently available for work, and

who have searched for work in the previous year (except the previous 4 weeks)

Exhibit 3.
Monthly Labor Review April 2002 29

For part-time workers to be classified as persons working

part time for economic reasons, they must state their reasons

for working part time, such as slack work, slower business, or

an inability to find full-time work. In addition to answering

this question, they are asked the following question about

their desire and current availability for full-time work: “Last

week, could you have worked full time if the hours had been

available?” It is reported that, as a result of the revisions, estimates of the number of persons working part time for economic reasons were reduced by approximately 20 percent.17

Adjustment procedures

Because of differences in the two surveys, Japan’s official

unemployment rate must be adjusted to match current U.S.

definitions and concepts. For example, in a procedural difference, the Japanese survey is conveyed to the respondent as

a self-administered questionnaire, whereas the U.S. survey is

presented in an interview format, with the surveyor questioning the respondent and recording the answers elicited.

This difference manifests itself in, among other things, different conceptions of the respondent’s availability for work.

Adjustment takes account of this disparity, as well as other

significant definitional differences.

Inactive jobseekers. In Japan, some unemployed persons

would not be counted as such under U.S. concepts. Of unemployed persons awaiting evaluation of their job applications, those who submitted their applications within the previous 4 weeks are classified as unemployed under the current U.S.

definitions and concepts. Unemployed persons in Japan who

are awaiting evaluation of job applications submitted more than

4 weeks previously are considered “inactive jobseekers” by U.S.

definitions and should be subtracted from reported official unemployment. This adjustment can be made.

Jobseekers not in the labor force. In Japan, some persons

classified as not in the labor force are found, under further

questioning in the February survey, to be currently available

for work and to have sought a job in the previous 2 to 4

weeks. Although enumerated as “not in the labor force,” these

individuals should be added to reported official unemployment for comparability with U.S. concepts. For the purposes

of this article, these individuals are collectively called

“jobseekers not in the labor force.” However, persons who

meet the conditions for being classified as jobseekers not in

the labor force, but who are not looking for work because

they are homemakers or are attending school, must be excluded from the category on the grounds that they are not

currently available for work. This adjustment can be made.

Persons waiting to start a new job within 30 days. In addition to the preceding adjustments, persons waiting to start a

new job within 30 days, who are currently available for a job,

and who have searched for work within the previous 4 weeks

must be added to reported official Japanese unemployment

for comparability with U.S. concepts from 1994 onward. (Prior

to 1994, this group also was considered to be unemployed in

the United States, but without the jobseeking requirement.)

However, recent school graduates who are waiting to start

a new job must be excluded from the category, because they

have been promised that they will start a new job on April 1.

The Japanese would find it strange to consider these persons representative of an underutilization of labor resources.

In the Special Survey, persons waiting to start a new job

within 30 days are classified as persons outside the labor

force and are surveyed separately from other persons outside the labor force. Accordingly, the category of “jobseekers

not in the labor force” also does not include persons waiting

to start a new job within 30 days, who are currently available

for a job, and who have searched for work within the past 4

weeks.

Through 1993, the Special Survey did not ask persons

waiting to start a new job within 30 days about their current

availability for a job and their job search activities within the

previous 4 weeks. A redesign of the questionnaire and tabulation was introduced into the Special Survey in 1994. Since

then, persons waiting to start a new job within 30 days have

been asked about their current job availability. However, they

are not asked about their job search activities in the previous 4

weeks. Therefore, the survey cannot yield the exact number of

individuals classified as persons waiting to start a new job within

30 days, who are not recent graduates, who are currently available for a job, and who have searched for work within the previous 4 weeks. (Individuals with these characteristics would be

counted as unemployed under U.S. concepts.)

One compromise solution to this problem is to classify all

persons who are waiting to start a new job within 30 days,

who are not recent graduates, and who are currently available

for work as unemployed.18 This article unavoidably employs

such a classification, adding all these persons to the adjusted

unemployed. Accordingly, the adjusted Japanese unemployment figure, undoubtedly, is overestimated to a slight degree.

Layoff. In the United States, persons who are on layoff are

classified as unemployed. In contrast, in Japan, those laid off

are not considered to be unemployed; instead, they are classified as employed—with a job, but not at work.

In Japan, during recessions, if a reduction in operations is

necessary, Japanese firms sometimes put employees on a sort

of temporary leave in order to reduce working hours. Such

absentees remain on the payroll, but usually do not receive

their full salary. Most of these employees believe that they

will return to work.
Labor Resources in Japan and the U.S.

30 Monthly Labor Review April 2002

Temporary absentees cannot be considered unemployed

in Japan, because they are still strongly attached to their job;

thus it is not appropriate to classify them as unemployed in

this article.19

Current job availability. In the Japanese Special Survey,

prior to 1995, persons classified as unemployed were tested

only implicitly on their current job availability. The instructions for filling in the questionnaire, but not the questions

themselves, asked persons classified as unemployed to confirm their current job availability. Since 1995, persons classified as unemployed have been tested explicitly on their current job availability. Therefore, from at least that year, Japan’s

official unemployment might not be overestimated on this

point.

Job search method. In the United States, in the CPS, persons who answer or place newspaper ads, visit employment

offices or businesses, call a firm to inquire about a position,

send job applications, or ask friends or family members for job

leads are considered to have engaged in an active job search

activity and, if they meet the other requisite criteria, are classified as unemployed. Persons who merely read classified advertisements in the newspaper are considered to have engaged in a passive job search activity and are, consequently,

not classified as unemployed.20

In Japan, in the Special Survey, respondents select from

among the following items to characterize their job search

activities:

(a) Applying to a public employment security office or a

private employment office

(b) Examining advertisements or magazines on job

vacancies

(c) Finding out [about jobs] through school or from

 acquaintances

(d) Applying to a prospective employer directly

(e) Preparing to start a business

(f) Other

Items (a), (c), (d), and (e) are classified as active job search

methods. Items (b) and (f), however, are ambiguous: whether

they are active or passive seems to depend on whether an overt

action has been taken. Therefore, on this score, Japan’s official

unemployment rate and the adjusted rate may be overestimated.

Labor force. In addition to adjusting official unemployment

data, it is necessary to adjust Japan’s labor force estimates, as

reported in the Special Survey, according to U.S. definitions

and concepts. The reason for this adjustment is that the labor

force figure is used as the denominator in unemployment rate

calculations. Adjusting the Japanese labor force estimates

requires unpaid family workers working fewer than 15 hours

per week21 and members of the Self-Defense Forces22 to be

subtracted from the reported labor force figures. Inactive

jobseekers also must be subtracted from those estimates, and

jobseekers not in the labor force must be added. The number

of persons waiting to start a new job within 30 days who are

currently available for work, except for recent graduates, is

added as well.

Expanded unemployment rates. Japan’s expanded unemployment rates under the U–4-through-U–6 framework also

can be calculated by using data from the Special Survey, because information on persons outside the labor force who

desire to work is available and more detailed information on

part-time workers is available as well. Discouraged workers

are persons outside the labor force who desire to work, but

who are not looking for a job because they believe that they

have no prospect of finding one. Other marginally attached

workers are persons outside the labor force who desire to

work, but who are not looking for a job because they are

attending school or keeping house, they have no time to look

for a job, they are temporarily ill, or they have other reasons

for not looking. All marginally attached workers (including

discouraged workers) must be able to take up a job immediately and must have searched for a job within the past year,

except for the previous 4 weeks. An interesting issue to be

discussed later is whether inactive jobseekers should be included among discouraged workers or marginally attached

workers.

Adjustments and comparisons

The previous section presented the reasons Japan’s unemployment rates need to be adjusted for closer comparability

with U.S. concepts. In the current section, the adjusted data

are provided and compared for the period 1994–2000. First,

adjustments are made to the official Japanese unemployment

rates. Then adjustments to the expanded rates U–4 through

U–6 are addressed.

Adjusted official unemployment rates. The details and results of adjusting Japan’s official unemployment rate to the

U.S. definitions and concepts from 1994 to 2000 for February

are shown in table 1 for both sexes, in table 2 for men, and in

table 3 for women. Table 1 shows that for both sexes, when

U.S. concepts are applied, Japan’s official unemployment rate,

U–3, is slightly overestimated, with the adjusted rate below

the official unemployment rate by 0.2 to 0.3 percentage point.

The reason for this difference is that the number of inactive

jobseekers subtracted from the unemployed is greater than

the sum of the following two additions to the unemployed: (1)

persons waiting to start a new job within 30 days who are
Monthly Labor Review April 2002 31

currently available for work and who are not recent graduates

and (2) the number of jobseekers not in the labor force.

No significant male-female difference appears in the Japanese official unemployment rate, although the rate for men is

slightly higher than that for women. Table 2 shows, however,

that Japan’s official unemployment rate is overestimated for

men: U–3 for men is below the official unemployment rate by

0.4 to 0.9 percentage point. The number of male inactive

jobseekers—which is more than double the number of female

inactive jobseekers—accounts for most of the unemployed

men added to the Japanese figures.

By contrast, table 3 shows that when U.S. concepts are

applied, the official unemployment rate is slightly underestimated for women: U–3 for women is above the official unemployment rate by 0.2 to 0.4 percentage point. One factor involved in explaining this underestimation is that the number

of jobseekers not in the labor force is larger than the number

of inactive jobseekers among women. Another factor is the

relatively large number of women waiting to start a new job

within 30 days who are currently available for work and are

not recent graduates.

From these results, we can confirm that there still exists a

male-female difference in U–3, but the degree of this difference has become smaller than that estimated by Sorrentino in

each of 1984, 1987, 1989, and 1993. One reason for this smaller

difference is the reduction by half in the number of persons

waiting to start a new job within 30 days, except for recent

graduates, because their current job availability is now tested

in the survey.

The next several sections present adjustments to the expanded unemployment rates U–4 through U–6. Because discouraged workers are added to the unemployed at U–4, their

measurement is discussed first, followed by all marginally attached persons (U–5), and persons working part time for economic reasons (U–6).

Discouraged workers. Japan does not have a concept of

“discouraged workers,” but something akin to the U.S. concept can be gleaned from the data collected in the Special

Survey. Changes in both the U.S. definition in 1994 and the

Japanese survey questionnaire in 1997 have important effects

on the outcome of the analysis. A further complication is that,

for Japan, a decision has to be made on how to treat the aforementioned inactive jobseekers. Some of these persons could

be discouraged workers, and whether they are included in

that category has a significant impact on the survey results.

In what follows, the method of determining the number of

discouraged workers in Japan is described, using the U.S.

definition that was revised in 1994. Problems in determining

the number who are currently available are addressed, and the

inactive jobseekers are discussed. After that, some remarks

are made concerning the impact of the change in the U.S.

definition on the estimated number of discouraged workers.

In the Special Surveys, persons not in the labor force are

questioned in detail about their desire for work, the last time

they sought work, the reasons they are not currently seeking

work, and their availability for work. The number of persons

who desired work, who sought work in the past year, and who

were available for work, but were not seeking it currently because they believed that there was “no prospect of finding a

job,” were determined to be the group most closely comparable to discouraged workers in the United States. (See the

second column of exhibit 3 for the current U.S. definition.)

Determining the number who were “available for work”

was not straightforward prior to 1997. In surveys carried out

before that year, these persons were asked, “If you find a job

now, can you take it?” The respondents were requested to

choose one of the following answers:

(a) Yes, immediately

(b) Yes, but later

(c) No or undecided

Seemingly, an answer “yes, immediately” indicates that the

respondent is currently available for work. Persons responding in this way were deemed to be discouraged workers under

U.S. concepts if they also met the other criteria of the definition. However, it is possible that some persons who answered

“yes, but later” are currently available for work, because they

might think that they “can start a job within this week,” but

“cannot start a job immediately.” Alternatively, some of those

who answered “yes, immediately” might be able start a job

more than 1 week later. Thus, the number of discouraged workers who would be counted as that under U.S. concepts remained ambiguous.

In 1997, a minor redesign was introduced into Japan’s Special Survey questionnaire that clarified the availability problem. Persons not in the labor force, but who desired to work,

would thereafter have to respond with one of the following

answers to the question asking them when they could take a

job:

(a) Yes, immediately

(b) Yes, but later

(c) Within 2 weeks

(d) More than 2 weeks later

(e) No or undecided

Those classified as discouraged workers are now clearly

limited to persons who choose “yes, immediately” and who

meet the other criteria described.

Besides discouraged workers as just delineated, another

group may be discouraged: the inactive jobseekers. Recall

that these are persons who have been eliminated from the

Japanese unemployed for purposes of approaching compara-
Labor Resources in Japan and the U.S.

32 Monthly Labor Review April 2002

bility with U.S. concepts, on the grounds that they did not actively seek work in the previous 4 weeks. Because Japan counts

them as unemployed, they are not questioned about whether

their state of mind can be characterized as “discouraged.” It is

known, however, that they are available for work and that they

looked for work in the previous year. Accordingly, one can reasonably speculate that some of them are not currently looking

for a job because they think the search will be in vain.

Because of the absence of specific information on inactive

jobseekers, two estimates of discouraged workers are shown in

tables 1, 2, and 3. The first does not include any of the inactive

jobseekers and comprises only those persons initially classified

 Japan’s alternative measures of unemployment and other forms of labor resource underutilization:

 U–3 through U–6, February 1994–2000, men and women

 Category 1994 1995 1996 1997 1998 1999 2000

Reported unemployed .................................. 1,940 1,990 2,240 2,300 2,460 3,130 3,270

Less unemployed who are inactive jobseekers .. 410 410 440 440 490 590 650

Plus jobseekers not in labor force

and currently available for work .................. 120 120 100 140 130 120 210

Plus persons waiting to start a new job

within 30 days1 ......................................... 100 130 140 110 110 110 150

Adjusted unemployed ................................. 1,750 1,830 2,040 2,110 2,210 2,770 2,980

Discouraged workers .................................... 190 330 360 320 350 460 530

Discouraged workers2 ................................... 600 740 800 760 840 1,050 1,180

U–4 numerator ............................................ 1,940 2,160 2,400 2,430 2,560 3,230 3,510

U–4 numerator2 ........................................... 2,350 2,570 2,840 2,870 3,050 3,820 4,160

Marginally attached workers3 .......................... 640 870 900 900 980 1,200 1,360

U–5 numerator3 ........................................ 2,390 2,700 2,940 3,010 3,190 3,970 4,340

Part-time workers for economic reasons .......... 1,490 3,330 1,630 1,490 1,780 2,320 2,270

U–6 numerator3 ........................................ 3,880 6,030 4,570 4,500 4,970 6,290 6,610

Reported labor force .................................... 64,840 65,020 65,100 66,350 66,450 66,360 66,270

Less family workers working fewer

than 15 hours per week ............................. 430 430 430 420 420 420 380

Less Self-Defense Forces ............................. 240 240 240 240 240 240 240

Less unemployed who are inactive

jobseekers .............................................. 410 410 440 440 490 590 650

Plus jobseekers not in labor force

and available for work ................................ 120 120 100 140 130 120 210

Plus persons waiting to start a new job

within 30 days ......................................... 100 130 140 110 110 110 150

Adjusted labor force .................................. 63,980 64,190 64,230 65,500 65,540 65,360 65,360

U–4 denominator ......................................... 64,170 64,520 64,590 65,820 65,890 65,800 65,890

U–4 denominator2 ........................................ 64,580 64,930 66,030 66,260 66,380 66,390 66,540

U–5 and U–6 denominator3 ............................ 64,620 65,060 65,130 66,400 66,520 66,540 66,720

Reported official unemployment rate (percent) ... 3.0 3.1 3.4 3.5 3.7 4.7 4.9

Adjusted unemployment rate (U–3) ............... 2.7 2.9 3.2 3.2 3.4 4.2 4.6

as not in the labor force who met all the U.S. criteria for being

discouraged workers. The second estimate includes all of the

inactive jobseekers as discouraged workers. The estimates are

significantly different. For example, including all inactive

jobseekers doubles the discouraged-worker estimate for 2000,

and the effect is even larger in other years.

Both the former and current U.S. definitions of discouraged workers are presented in exhibit 3. The 1994 change in

definition had a large impact on the number of discouraged

workers in both the United States and Japan. In the two countries, the number of discouraged workers was drastically reduced, mainly because of the new requirement for having

U–4 (percent) ............................................. 3.0 3.4 3.7 3.7 3.9 4.9 5,3

U–4(percent)2 ............................................. 3.6 4.0 4.4 4.3 4.6 5.8 6.3

U–5(percent)3 ............................................. 3.7 4.2 4.5 4.5 4.8 6.0 6.5

U–6(percent)3 ............................................. 6.0 9.3 7.0 6.8 7.5 9.5 9.9

U–4/U–3 .................................................... 1.11 1.17 1.16 1.16 1.15 1.17 1.15

U–4/U–32 ................................................... 1.33 1.38 1.38 1.34 1.35 1.38 1.37

U–5/U–33 ................................................... 1.37 1.45 1.41 1.41 1.41 1.43 1.41

U–6/U–33 ................................................... 2.22 3.21 2.19 2.13 2.21 2.26 2.15

1

 Persons waiting to start a new job within 30 days are currently available

for work and do not include recent graduates. 2 Inactive jobseekers are classified as discouraged workers.

3

 Inactive jobseekers are classified as marginally attached workers.

NOTE: Sums do not necessarily add to totals because of rounding.

SOURCE: Special Survey of the Labor Force Survey, Statistics Bureau,

Tokyo.

Table 1.

[In thousands]
Monthly Labor Review April 2002 33

undertaken a job search in the previous year and for explicitly

demonstrating one’s current availability for work during the

reference week. Therefore, the results of the comparisons set

forth here for the period 1994-2000 are quite different in magnitude from the comparisons for the years prior to 1994, as

presented in Sorrentino’s studies. (See appendix.)

Table 4 illustrates the effect of applying the 1994 CPS definitions to the Japanese data on discouraged workers. The

rows headed “(D)” and “(E),” for men and for women, present

the results based on the earlier definition. If all of the inactive

jobseekers are excluded, then, in 2000, the number of discouraged workers in Japan under the current definition is only

one-quarter of the number that it was under the old definition

(140,000, compared with 570,000). If the inactive jobseekers

Japan’s alternative measures of unemployment and other forms of labor resource underutilization,

U–3 through U–6, February 1994–2000, men

 Category 1994 1995 1996 1997 1998 1999 2000

Reported unemployed .......................................... 1,100 1,170 1,330 1,350 1,510 1,890 2,040

Less unemployed who are inactive obseekers .......... 280 270 310 310 350 430 470

Plus jobseekers not in labor force

and currently available for work .......................... 30 20 20 30 30 40 60

Plus persons waiting to start a new job

 within 30 days1 ............................................... 30 40 40 30 40 40 60

Adjusted unemployed ........................................ 880 960 1,080 1,100 1,230 1,540 1,690

Discouraged workers ........................................... 40 90 90 70 80 140 140

Discouraged workers2 .......................................... 320 360 400 380 430 570 610

U–4 numerator ................................................... 920 1,050 1,170 1,170 1,310 1,680 1,830

U–4 numerator2 .................................................. 1,200 1,320 1,480 1,480 1,660 2,110 2,300

Marginally attached workers3 ................................. 340 410 440 430 470 630 670

U–5 numerator3 .................................................. 1,220 1,370 1,520 1,530 1,700 2,170 2,360

Part-time workers for economic reasons .................. 520 950 610 550 690 890 840

U–6 numerator3 .................................................. 1,740 2,320 2,130 2,080 2,390 3,060 3,200

Reported labor force ........................................... 38,860 38,840 39,070 39,610 39,590 39,690 39,600

Less family workers working fewer than 15 hours

per week........................................................ 40 40 40 40 40 40 30

Less Self-Defense Forces .................................... 230 230 230 230 230 230 230

Less unemployed who are inactive

jobseekers ..................................................... 280 270 310 310 350 430 470

Plus jobseekers not in labor force

and available for work ....................................... 30 20 20 30 30 40 60

Plus persons waiting to start a new job

 within 30 days ................................................. 30 40 40 30 40 40 60

Adjusted labor force ......................................... 38,370 38,360 38,550 39,090 39,040 39,070 38,980

U–4 denominator ................................................ 38,410 38,450 38,640 39,160 39,120 39,210 39,120

U–4 denominator2 ............................................... 38,690 38,720 38,950 39,470 39,470 39,640 39,590

U–5 and U–6 denominator3 ................................... 38,710 38,770 38,990 39,520 39,510 39,700 39,650

Reported official unemployment

 rate (percent) .................................................. 2.8 3.0 3.4 3.4 3.8 4.8 5.2

Adjusted unemployment rate (U–3) ...................... 2.3 2.5 2.8 2.8 3.2 3.9 4.3

U–4 (percent) .................................................... 2.4 2.7 3.0 3.0 3.4 4.3 4.7

U–4(percent)2 .................................................... 3.1 3.4 3.8 3.8 4.2 5.3 5.8

U–5(percent)3 .................................................... 3.2 3.5 3.9 3.9 4.3 5.5 6.0

U–6(percent)3 .................................................... 4.5 6.0 5.5 5.3 6.1 7.7 8.1

U–4/U-3 ........................................................... 1.04 1.08 1.07 1.07 1.06 1.10 1.10

U–4/U-32

.......................................................... 1.35 1.36 1.36 1.36 1.31 1.36 1.35

U–5/U-33 .......................................................... 1.39 1.40 1.39 1.39 1.34 1.41 1.40

U–6/U-33 .......................................................... 1.96 2.40 1.96 1.89 1.91 1.97 1.88

 1 Persons waiting to start a new job within 30 days are currently available

for work and do not include recent graduates.

 2 Inactive jobseekers are classified as discouraged workers.

 3 Inactive jobseekers are classified as marginally attached workers.

 NOTE: Sums do not necessarily add to totals because of rounding.

 SOURCE: Special Survey of the Labor Force Survey, Statistics Bureau,

Tokyo.

Table 2.

 [In thousands]
Labor Resources in Japan and the U.S.

34 Monthly Labor Review April 2002

are included, then the decrease is less: about 60 percent of the

former number of discouraged workers are still counted

(610,000, compared with 1,040,000). Recall that in the United

States, the new definition resulted in cutting the number of

discouraged workers in half.

The reduction in the estimated number of discouraged

workers is a direct result of the testing of respondents’ current availability and past job search activities. Both factors

contribute to the reduction, but it is difficult to discern the

effect of each separately.

The number of discouraged workers estimated on the basis of the current CPS definitions and concepts has increased

in Japan in greater proportion than the increase in U–3. Therefore, discouraged workers might seem now to be more closely

connected to the job market as a result of the CPS revisions. In

Japan, however, the labor force attachment of discouraged

workers has not been examined empirically, so no data are

available on what percentage of discouraged workers entered

or returned to the labor market or even whether they tested

the job market.

Marginally attached workers. This group includes discouraged workers and all other persons who wanted a job, who

sought work in the previous year, but not the past 4 weeks,

and who were currently available for work. That is, the group

includes the discouraged, as well as persons who gave other

reasons for not seeking work in the past 4 weeks, even though

they expressed a desire for a job.

TJapan’s alternative measures of unemployment and other forms of labor resource underutilization,

 U–3 through U–6, February 1994–2000, women

 [In thousands]

Category 1994 1995 1996 1997 1998 1999 2000

Reported unemployed ................................................... 840 820 910 940 950 1,240 1,230

Less unemployed who are inactive jobseekers ................... 130 140 130 130 140 160 180

Plus jobseekers not in labor force

and currently available for work ................................... 90 90 700 110 100 80 160

Plus persons waiting to start a new job

within 30 days1 ......................................................... 60 80 100 80 70 70 90

Adjusted unemployed ................................................. 860 850 950 1,000 980 1,230 1,300

Discouraged workers .................................................... 150 250 260 250 260 320 390

Discouraged workers2 ................................................... 280 390 390 380 400 480 570

U–4 numerator ............................................................ 1,010 1,100 1,210 1,250 1,240 1,550 1,690

U–4 numerator2 ........................................................... 1,140 1,240 1,340 1,380 1,380 1,710 1,870

Marginally attached workers3 .......................................... 300 480 470 460 500 580 680

U–5 numerator3 ........................................................... 1,160 1,330 1,420 1,460 1,480 1,810 1,980

Part-time workers for economic reasons ........................... 970 2,380 1,020 940 1,080 1,430 1,440

U–6 numerator3 ........................................................... 2,130 3,710 2,440 2,400 2,560 3,240 3,420

Reported labor force ..................................................... 25,970 26,180 26,030 26,740 26,860 26,670 26,670

Less family workers working fewer than

 15 hours per week ..................................................... 390 390 390 370 370 370 350

Less Self-Defense Force ............................................... 10 10 10 10 10 10 10

Less unemployed who are inactive jobseekers ................... 130 140 130 130 140 160 180

Plus jobseekers not in labor force

 and available for work ................................................. 90 90 70 110 100 80 160

Plus persons waiting to start a new job

 within 30 days ........................................................... 60 80 100 80 70 70 90

Adjusted labor forces ................................................. 25,590 25,810 25,670 26,420 26,510 26,280 26,380

U–4 denominator .......................................................... 25,740 26,060 25,930 26,670 26,770 26,600 26,770

U–4 denominator2 ......................................................... 25,870 26,200 26,060 26,800 26,910 26,760 26,950

U–5 and U–6 denominator3 ............................................. 25,890 26,290 26,140 26,880 27,010 26,860 27,060

Reported official unemployment rate (percent).................... 3.2 3.1 3.5 3.5 3.5 4.7 4.6

Adjusted unemployment rate (U–3)................................ 3.4 3.3 3.7 3.8 3.7 4.7 4.9

U–4 .......................................................................... 3.9 4.2 4.7 4.7 4.6 5.8 6.3

U–42 ......................................................................... 4.4 4.7 5.1 5.2 5.1 6.4 6.9

U–5 3 ......................................................................... 4.5 5.1 5.4 5.4 5.5 6.7 7.3

U–63 ......................................................................... 8.2 14.1 9.3 8.9 9.5 12.1 12.6

U–4/U–3 .................................................................... 1.15 1.27 1.27 1.24 1.24 1.23 1.29

U–4/U–32 ................................................................... 1.29 1.42 1.38 1.37 1.38 1.36 1.41

U–5/U–33 ................................................................... 1.32 1.55 1.46 1.42 1.49 1.43 1.49

U–6/U–33 ................................................................... 2.41 4.27 2.51 2.34 2.57 2.57 2.57

 1 Persons waiting to start a new job within 30 days are currently

available for work and do not include recent graduates

2 Inactive jobseekers are classified as discouraged workers.

3 Inactive jobseekers are classified as marginally attached workers.

Table 3.

NOTE: Sums do not necessarily add to totals because of rounding.

SOURCE: Special Survey of the Labor Force Survey, Statistics Bureau,

Tokyo.
Monthly Labor Review April 2002 35

It is easier to decide how to classify inactive jobseekers

(unemployed persons awaiting evaluation of job applications

submitted more than 4 weeks previously) at this point. Although

the Special Survey does not question them further, it can be

assumed that inactive jobseekers wanted a job (because they

have applied for one) and that they most likely looked for

work in the past year (because they are awaiting evaluation

of a job application). Also, given that they were initially classified as unemployed in the survey, it can be assumed that they

were available for work. Thus, all of the inactive jobseekers are

allocated to the marginally attached group (U–5). It is possible

that this group is slightly overestimated, because some may

indeed be awaiting evaluation of their application for more

than a year.

Part time for economic reasons. In the Special Survey, parttime workers are not questioned explicitly about their desire

or current availability for full-time work. Because, since 1994,

U.S. concepts require part-time workers to desire, and to be

available for, full-time work in order to be classified as working

part time for economic reasons, it is not possible to determine

the precise number of persons working part time for economic

reasons in Japan.

In Japan, workers who work fewer than 35 hours in the

reference week are classified as part-time workers. They are

asked about their reasons for working part time and their desire for full-time work. In this regard, they are requested to

choose from among the following answers:

Normal work time is fewer than 35 hours.

(a) I wish to work 35 or more hours.

(b) I wish to work fewer than 35 hours.

Reasons imposed by business or employer:

(c) Slack in businesses

(d) Other

(e) Due to own or family condition

(f) Bad weather

(g) Other

In this article, part-time workers who choose (a) and (c) are

Estimated number of discouraged workers in Japan, by sex, February 1994–2000

 Category 1994 1995 1996 1997 1998 1999 2000

 Men

(A) Adjusted official unemployment ............... 880 960 1,080 1,100 1,230 1,540 1,690

(B) Discouraged workers, based

 on the current concepts1 ...................... 40 90 90 70 80 140 140

(C) Discouraged workers, based

 on the current concepts2 ...................... 320 360 400 380 430 570 610

(D) Discouraged workers, based

 on the earlier concepts1 ....................... 480 540 510 440 480 560 570

(E) Discouraged workers, based

 on the earlier concepts2 ....................... 760 810 820 750 830 990 1,040

(B)/(A) .................................................... .05 .09 .08 .06 .07 .09 .08

(C)/(A) .................................................... .36 .38 .37 .35 .35 .37 .36

(D)/(A) .................................................... .55 .56 .47 .40 .39 .36 .34

(E)/(A) .................................................... .86 .84 .76 .68 .68 .64 .62

(B)/(D) .................................................... .08 .17 .18 .16 .17 .25 .25

(C)/(E) .................................................... .42 .44 .49 .51 .52 .58 .59

 Women

(A) Adjusted official unemployment ............... 860 850 950 1,000 980 1,230 1,300

(B) Discouraged workers, based

 on the current concepts1 ...................... 150 250 260 250 260 320 390

(C) Discouraged workers, based

 on the current concepts2 ...................... 280 390 390 380 400 480 570

(D) Discouraged workers, based

 on the earlier concepts1 ....................... 1,990 2,110 2,270 1,640 1,670 1,880 1,850

(E) Discouraged workers, based

 on the earlier concepts2 ....................... 2,120 2,250 2,400 1,770 1,810 2,040 2,030

(B)/(A) .................................................... .17 .29 .27 .25 .27 .26 .30

(C)/(A) .................................................... .33 .46 .41 .38 .41 .39 .44

(D)/(A) .................................................... 2.31 2.48 2.39 1.64 1.70 1.53 1.42

(E)/(A) .................................................... 2.47 2.65 2.53 1.77 1.85 1.66 1.56

(B)/(D) .................................................... .08 .12 .12 .15 .16 .17 .21

(C)/(E) .................................................... .13 .17 .16 .22 .22 .24 .28

1 Inactive jobseekers are not classified as discouraged workers.

2 Inactive jobseekers are classified as discouraged workers.

SOURCE: Special Survey of the Labor Force Survey, Statistics Bureau,

Tokyo.

Table 4.

[In thousands]
Labor Resources in Japan and the U.S.

36 Monthly Labor Review April 2002

classified as persons working part time for economic reasons

for purposes of comparison with the same U.S. category. The

former are asked about their desire for a full-time job, but not

about their current availability for full-time work. The latter are

asked about neither their desire for a full-time job nor their

current availability for full-time work. Therefore, it is possible

that the number of persons working part time for economic

reasons in Japan is overestimated in relation to U.S. concepts,

which, as mentioned earlier, require the person to desire, and

be available for, full-time work.

In the Special Survey conducted in 1995, the design of the

questionnaire for part-time workers was different from that of

other years. In the 1995 Special Survey, the focus was on parttime workers whose normal worktime was fewer than 35 hours

per week. These workers were asked not only about their desire for full-time work, but also about their reasons for working fewer than 35 hours. This change in the design of the

questionnaire might have induced time to express their desire

for full-time work. The number of part-time workers whose

normal worktime was fewer than 35 hours and who wished to

work 35 or more hours was extraordinarily large. In the 1995

Special Survey, workers who worked fewer than 35 hours in

the reference week were requested to choose from among the

following answers:

Normal worktime in fewer than 35 hours.

Reasons imposed by business or employer:

(a) Slack in businesses

(b) Other

(c) Due to own or family condition

(d) Bad weather

(e) Other

If normal worktime is fewer than 35 hours, why [is that

so]?

(a) I do not wish to work 35 hours

or

I wish to work 35 hour or more hours, but [I am

 unable to because]

(b) Of bad business conditions

(c) I cannot find work [for] 35 or more hours

(d) Of [my] own or [my] family[’s] condition

(e) Other

Estimates of expanded unemployment rates. The details and

results of calculating U–4 through U–6 for Japan from 1994 to

2000 for February are shown in tables 1, 2, and 3. The relative

ratios of expanded unemployment rates to the official unemployment rate, U–3, also are given in these tables.

(1) U–4 and U–5. Because of the problems just discussed

concerning the classification of inactive jobseekers, it is not

possible to determine the precise number of discouraged

workers in Japan. Accordingly, the tables show the alternative unemployment measure U–4 as a range, depending on

how discouraged workers are classified.

If inactive jobseekers are classified as discouraged workers,

then the number of discouraged workers is an upper limit in

which the range of discouraged workers is fully expanded. U–4

and U–5 also represent an upper limit.

If inactive jobseekers are not classified as discouraged

workers, then the number of discouraged workers is a lower

limit that falls strictly within U.S. definitions and concepts. U–4

related to the number of such workers also is a lower limit.

If inactive jobseekers are classified as discouraged workers, then U–4 is higher than U–3 by 0.9 to 1.7 percentage

points for both sexes during the 1994–2000 period. The increase in the number of male inactive jobseekers then contributes significantly to the growth in the number of male discouraged workers. The ratio of U–4 to U–3 for women is

slightly higher than that for men.

If inactive jobseekers are not classified as discouraged

workers for both sexes, then the number of discouraged workers increases from 1994 to 2000 in proportion to the increase

in U–3—particularly in 1999 and 2000, when U–3 rose rapidly.

U–4 also increases and is higher than U–3 by 0.3 to 0.7 percentage point during that period. The ratio of U–4 to U–3 for

women is clearly higher than that for men.

With all inactive jobseekers classified as marginally attached workers, the number of marginally attached workers

might be slightly overestimated, because inactive jobseekers

who applied for a job more than 1 year before the date of the

survey and who did not search for a job during the subsequent year would be included in the count of marginally attached workers. The estimate is then an upper limit for U–5,

which in that case is higher than U–3 by 1.4 points for both

sexes during the 1994–2000 period. (See U–5/U–3 ratio in table

1.) Also, the increase in the number of male inactive jobseekers

contributes significantly to the growth in the number of male

marginally attached workers. Except for 1994, during the 1995–

2000 period, the relative ratio of U–5 to U–3 for women was

slightly higher than that for men.

Some labor economists might imagine that in Japan the

number of females classified as marginally attached workers

is quite large because many women are homemakers and cannot work in spite of their desire to do so. The figures in the

tables, however, contradict these expectations. The number

of women who desire work, but who are not seeking a job

because they are homemakers, is relatively large in Japan, but

most of these women are not currently available for work and

have not engaged in jobseeking activities previously. This

gap between intention and activity in Japanese women warrants further investigation.

(2) U–6. At U–6, persons working part time for economic

reasons are added to U–5. For both sexes, the number of per-
Monthly Labor Review April 2002 37

sons working part time for economic reasons increased

roughly in proportion to the increase in U–3 from 1994 to

2000, except in 1996. The number was especially high in 1999

and 2000, reflecting a concomitant increase in U–3.

More than 60 percent of persons working part time for

economic reasons are women, so there is a significant malefemale difference in the ratio of U–6 to U–3. Specifically, the

ratio for women is much higher than that for men.

Comparison of United States and Japan

The official U.S. unemployment rate U–3, as well as the alternative measures U–4 through U–6, are shown in table 5 for

the period 1994–2000.23 All of the figures are annual averages.

The ratios of the expanded unemployment rates to the official

rate also are shown.

For both sexes, as U–3 declined during the period, U–4

through U–6 also declined. U–3 appears to exhibit no significant male-female difference. The ratio of U–4 to U–3 is almost

the same for men as for women. There is, however, a significant male-female difference in the ratios of U–5 to U–3 and

U–6 to U–3, with the ratios for women clearly higher than

those for men. These results imply that in the United States,

the probability of falling into the category of “other marginU.S. alternative measures of unemployment and other forms of labor resource underutilization, U–3 through

[In percent]

 Rate 1994 1995 1996 1997 1998 1999 2000

 Total

U–3 ............................... 6.1 5.6 5.4 4.9 4.5 4.2 4.0

U–4 ............................... 6.5 5.9 5.7 5.2 4.7 4.4 4.2

U–5 ............................... 7.4 6.7 6.5 5.9 5.4 5.0 4.8

U–6 ............................... 10.9 10.1 9.7 8.9 8.0 7.4 7.0

U–4/U–3 ......................... 1.06 1.05 1.05 1.05 1.04 1.05 1.05

U–5/U–3 ......................... 1.21 1.20 1.20 1.20 1.20 1.19 1.20

U–6/U–3 ......................... 1.78 1.80 1.79 1.80 1.79 1.77 1.75

 Men

U–3 ............................... 6.2 5.6 5.4 4.9 4.4 4.1 3.9

U–4 ............................... 6.6 5.9 5.7 5.1 4.7 4.3 4.1

U–5 ............................... 7.3 6.6 6.3 5.7 5.2 4.8 4.7

U–6 ............................... 10.5 9.6 9.2 8.4 7.6 7.0 6.7

U–4/U–3 ......................... 1.06 1.06 1.06 1.05 1.06 1.05 1.05

U–5/U–3 ......................... 1.18 1.18 1.18 1.17 1.18 1.18 1.19

U–6/U–3 ......................... 1.70 1.73 1.71 1.72 1.73 1.71 1.71

 Women

U–3 ............................... 6.0 5.6 5.4 5.0 4.6 4.3 4.1

U–4 ............................... 6.3 5.9 5.7 5.2 4.8 4.5 4.3

U–5 ............................... 7.5 6.9 6.7 6.1 5.6 5.3 5.0

U–6 ............................... 11.3 10.6 10.2 9.4 8.5 7.9 7.4

U–4/U–3 ......................... 1.05 1.05 1.05 1.04 1.04 1.04 1.04

U–5/U–3 ......................... 1.25 1.23 1.23 1.22 1.22 1.21 1.20

U–6/U–3 ......................... 1.88 1.88 1.88 1.87 1.85 1.82 1.80

SOURCE: Current Population Survey, U.S. Bureau of Labor Statistics and Bureau of the Census.

ally attached workers” or “persons working part time for economic reasons” is higher for women. Therefore, in the United

States, the degree of underutilization of female labor resources may be said to be higher than that of male labor

resources.

 The rates U–3 through U–6 for the United States and

Japan may be compared each year by using the data shown

in tables 1, 3, 4, and 5. The comparison requires caution,

however, because Japan’s yearly averaged figure is not available and the unemployment rate is affected by economic fluctuations. Although no significant differences are found in

the results for February and August in 1999 and 2000, it is still

wise to take care when comparing rates.

To eliminate the effects of economic fluctuations, each measure U–3 through U–6 of both countries from 1994 to 2000 was

averaged. The results are shown in table 6. Averaged ratios of

U–4 through U–6 to U–3 also are shown. There are two cases

for Japan’s discouraged workers: in one, inactive jobseekers are

not classified as discouraged workers; in the other, inactive

jobseekers are classified as discouraged workers.

Japan’s official unemployment rate is lower than U–3 for

the United States, and Japan’s adjusted unemployment rate

U–3 also is lower than U–3 for the United States for both

sexes together, for men, and for women. Japan’s expanded

U–6, annual averages, 1994–2000

Table 5.
Labor Resources in Japan and the U.S.

38 Monthly Labor Review April 2002

unemployment rate encompassing discouraged workers, U–4,

is below the U.S. level for both sexes together and for men,

even when inactive jobseekers are classified as discouraged

workers. However, Japan’s U–4 for women is higher than its

counterpart in the United States when inactive jobseekers

are classified as discouraged workers. The Japanese ratio of

U–4 to U–3 is higher than the U.S. ratio for both sexes together,

for men, and for women, even when inactive jobseekers are not

classified as discouraged workers.

All of these results indicate that even after asking respondents about their current availability for a job and their past

job search activities, surveys find that the number of Japanese discouraged workers—especially women—is still relatively large. After taking discouraged workers into account,

Japan’s underutilization of labor resources is still relatively

high compared with that of the United States, especially for

women.

Japan’s expanded unemployment rate encompassing marginally attached workers, U–5, is below the U.S. level for

both sexes, for men, and for women. Japan’s relative ratio of

U–5 to U–3 is above the U.S. level for both sexes, for men,

and for women. With marginally attached workers taken into

account, the degree of Japan’s labor resource underutilization

is also relatively high compared with the U.S. level.

Japan’s expanded unemployment rate encompassing marginally attached workers and persons working part time for

economic reasons, U–6, is below the U.S. level for both sexes

and for men. Japan’s U–6 for women is well above the U.S.

level.

Japan’s ratio of U–6 to U–3 is clearly higher than the U.S.

level for both sexes. The ratio of U–6 to U–3 for men is approximately the same as that for the United States. The ratio of

U–6 to U–3 for Japanese women is much higher than that of

their U.S. counterparts.

The results regarding U–6 indicate that the number of persons working part time for economic reasons is relatively

large in Japan, even if we discount the factor that that number is overestimated in comparison with estimates produced

in accordance with U.S. concepts. Japanese women especially have a higher tendency to work part time for economic

reasons.

When marginally attached workers and persons working part

time for economic reasons are taken into account, Japan’s labor

resource underutilization is seen to be relatively high compared

with that the United States, especially as regards women. Large

numbers of persons working part time for economic reasons

contribute to the underutilization of labor resources.

Through the foregoing investigations, it becomes clear that

the changes in definitions and concepts of discouraged workers have a large impact on comparisons of unemployment rates

in the two countries. Similarly, changes in the definitions and

concepts of persons working part time for economic reasons

also have a considerable impact on the comparisons.

From the preceding analysis, it becomes evident as well that

in Japan there exist gender-related differences in the

underutilization of labor resources. Women are more

underutilized than men, although less so when the 1994 CPS

revisions are taken into account. The analysis also suggests

that Japan’s labor resources would be seen as more underutilized

than U.S. labor resources if the official unemployment rates of

both countries were the same. The degree of underutilization of

labor resources as measured by U–4 depends on whether one

places inactive jobseekers in the group of discouraged workers. However, it is clear that almost all the inactive jobseekers

Unemployment rates and labor resource underutilization in the United States and Japan, 1994–2000 averages

(annual for United States, February for Japan)

Both sexes Men Women

 United States Japan United States Japan United States Japan

Official .................... 5.0 3.8 4.9 3.8 5.0 3.7

U–3 ........................ 5.0 3.5 4.9 3.1 5.0 3.9

U–4 ........................ 5.2 4.0 5.2 3.4 5.2 4.9

U–41 ....................... ... 4.7 ... 4.2 ... 5.4

U–52 ....................... 6.0 4.9 5.8 4.3 6.2 5.7

U–62 ....................... 8.8 8.0 8.4 6.2 9.3 10.7

U–4/U–3 .................. 1.05 1.15 1.06 1.08 1.04 1.24

U–4/U–31 ................. ... 1.36 ... 1.35 ... 1.38

U–5/U–32 ................. 1.20 1.41 1.18 1.39 1.23 1.45

U–6/U–32 ................. 1.78 2.31 1.71 1.98 1.86 2.72

1 Inactive jobseekers are classified as discouraged workers in Japan.

2 Inactive jobseekers are classified as marginally attached workers in Japan.

SOURCE: United States—Current Population Survey, U.S. Bureau of Labor

Statistics, and Bureau of the Census; Japan—Special Survey of the

Labor Force Survey,” Japanese Statistics Bureau.

[In percent]

Rate

Table 6.
Monthly Labor Review April 2002 39

should be classified as other marginally attached workers

at U–5. Nonetheless, more detailed information about inactive jobseekers has not been collected in Japan, and this paucity

of information restricts investigations examining the country’s

underutilization of labor resources.

Another caveat is that persons on temporary leave (discussed earlier in the section on layoffs), persons given little

work to do, and temporary workers who do not expect their jobs

to last are not included in this analysis of underutilization,

because they did not fit into the foregoing framework. Individuals in such situations also form a part of Japan’s underutilization of labor resources, and they are discussed in the

next section.

Implications of the comparisons

The differences in the labor market structures of Japan and the

United States are reflected in the preceding findings. The explanation given by Sorrentino for these differences is basically

valid, but we have to apply her ideas to current conditions,

because labor market structures and the surrounding environment have changed since the publication of her articles.

In Japan, for many years large and medium-sized companies have guaranteed the long-term employment of core employees. Although most core employees are men, the number

of female core employees has been increasing. The Equal

Employment Opportunity Law, enacted in 1985, has intensified this trend.

Most core employees begin working for their employers

after graduating from college, and they have to leave at the

mandatory retirement age. Many Japanese managers of large

and medium-sized companies recognize that the long-term

employment system has contributed much to the accumulation of human capital by developing firm-specific skills in core

employees. These managers express their intention to maintain the system in the future.

Firms tend to hoard core workers during recessions in

order to avoid losing firm-specific skills. Even middle-aged or

elderly core employees who did not climb the career ladder

can stay on at a firm without losing their jobs, because they

are given pseudomanagement posts. This practice can be

considered a form of underutilization. Core employees receive a retirement allowance, and sometimes a corporate pension, upon mandatory retirement. The longer the length of

tenure, the greater is the award.

It is often said that social institutions have complemented

the long-term employment system, so the vested rights and

benefits of core employees have been maintained. Japanese

managers cannot dismiss core employees freely, because dismissal at will is restricted by legislation. Certain specified

conditions must be met to fulfill judicial precedents.24

In Japan, retirement benefits are not portable, so the employee cannot convey his or her rights upon quitting a job

before mandatory retirement. Accordingly, worker mobility is

greatly restricted.

Many companies were forced to restructure this past decade as Japan experienced some economic sluggishness. Past

studies show that in severe recessions, if firms sustain deficits for more than two consecutive terms (usually 2 years),

they cannot avoid reducing their staffs.25 Interestingly, regardless of the country’s social institutions, it is possible to

reduce the number of core employees because the long-term

employment system is based on an implicit contract between

employer and employee.

During recession, employers often use the early retirement system as a means of reducing their staffs. Paying extra

severance pay induces some core employees to retire at an

age younger than the mandatory retirement age. Older employees frequently are forced or persuaded to accept the

offer of early retirement. Restraint in hiring recent graduates

also is an effective method of reducing the number of core

employees, because older core employees have no choice

but to retire under the mandatory retirement system.

There is no hard evidence which proves that job security

is declining in Japan, but some job losers who were core

employees have contributed to the soaring official unemployment rate in Japan. At the same time, opportunities for

youths to get a good job are scarce and limited to the time

just after graduation from school. Reflecting this scarcity of

opportunity, the number of unemployed youths soared during the decade.26

Note that core employees protected by the long-term employment system are only about one-fourth of total employment in Japan.27 In most Japanese small companies, the longterm employment system has not been adopted, although

some such companies have tried to adopt it, modeling its use

on that in large-sized companies. In general, the level of an

employee’s skills in a firm depends on the employee’s tenure

with the firm. Because labor mobility between small companies

has been relatively high in Japan, employees have not formed

enough firm-specific skills. Many who worked for small companies lost their jobs as a result of restructuring or the business

folding. Male non-white-collar workers and female clerks working for small companies are prone to lose their jobs during recessions. They cannot find new jobs easily, because they lack the

requisite skills. These job losers have contributed much to the

soaring official unemployment rate.

A recent survey supplementary to the Regular Survey investigated the situation of unemployed persons who lost

their jobs. The survey revealed that persons older than 45

years, persons who had been in unskilled jobs, and persons

who worked for small firms account for a large portion of job

losers.28

In Japan, the situation of discouraged workers and
Labor Resources in Japan and the U.S.

40 Monthly Labor Review April 2002

those classified as “other marginally attached workers”

has not yet been surveyed. Thus, the reason they fell into

those categories is not clear, and any explanation thereof is

speculative.

As mentioned earlier, in Japan it is possible, but not easy,

to reduce the number of core employees of large and medium-sized companies. Reducing the number of nonregular

workers, such as part-time workers, temporary workers who

do not expect their jobs to last (also called “dispatched workers”), and seasonal workers, is the major method by means of

which Japan’s large and medium-sized companies reduce

their staffs during recessions. Because women account for

the major portion of part-time workers and dispatched workers, and because most of them also are engaged in housework, during recessions they might become discouraged

workers or “other marginally attached workers,” bypassing a

categorization of “unemployed” altogether.

Also as mentioned earlier, in Japan there are male discouraged workers, although their number is relatively small. The

number of male part-time workers and dispatched workers

has increased recently. Possibly, many are often seasonally

employed as factory workers or construction workers. Some

work away from their hometowns in major cities during the

winter. They might come back to their hometowns and become discouraged or marginally attached to the labor market

when they lose their jobs.

Finally, also worthy of mention is the increase in the number of persons working part time for economic reasons during recession. The reason they fall into such a category is

not clear, and, again, whatever explanation is tendered is

speculative. In that vein, employers can reduce working

hours as a method of coping with recession. In fact, it is

easier for employers to reduce employees’ working hours

than to reduce the number of workers. Doing so, however,

would increase the number of persons working part time for

economic reasons during recession.

In Japan, part-time workers are officially defined as workers who work fewer than 35 hours a week. However, many,

who also are called contingent workers in the United States,

work more than 35 hours a week. These individuals are not

core employees and are hired under short-term contracts.

Women account for the major portion of this type of parttime worker. Such workers might become part-time workers for

economic reasons during recession. If so, employers’ strategies accelerate this trend, because, to reduce costs, employers increase the composition of part-time workers and dispatched workers in their employ, instead of decreasing the

number of full-time workers.

During the Japanese recession of the past decade, many

core regular jobs were abolished. By contrast, many

nonregular jobs were created. Part-time workers replaced core

workers through attrition. Obviously, this kind of job creation does not guarantee any improvement in the economic

welfare of part-time workers.

In accordance with a phenomenon known as the “addedworker effect,” Japanese women who usually are engaged in

housework tend to enter the labor market during recession

because their husbands’ wages are reduced. However, most

of them cannot find full-time or part-time jobs that satisfy

their desired conditions, so they have to engage in part-time

jobs with undesirable working conditions. Some are unable

to find a job at all and give up searching. These women might

become discouraged or might be classified as “other marginally attached workers” without being engaged in part-time

work.

Also noteworthy in Japan is the fact that some men work

part time for economic reasons. There are several possible

explanations for their doing so.

Male heads of household who lost their jobs as a result of

restructuring or their companies folding are forced to engage

in stopgap jobs if they cannot find full-time work after their

unemployment insurance benefits run out. Therefore, they

become part-time workers for economic reasons.

Some persons who were core workers for large and medium-sized companies have to work after their mandatory

retirement because they have to pay back housing loans and

because they may have to wait until they reach an older age

to receive their full pensions. Full-time opportunities for them

are scarce, and they tend to become nonregular workers, such

as part-time workers or consultants.

Unemployed men and women who worked for small companies likely are hard pressed to find new jobs because of

both their age and outdated skills, so they may find themselves forced to engage in part-time work. It is also difficult

for recent graduates to find full-time jobs during a recession,

because of restrictions on hiring by employers. Some are

accordingly forced to work part time, contrary to what they

desire.

In order for a country to utilize labor resources more efficiently, its market mechanisms must work more effectively.

That, however, requires some reformation of the labor market, such as promoting the learning of skills, creating jobs,

and reducing job search costs. In Japan, data concerning job

turnover and labor turnover are scarce, and as a result, the

relationship between restructuring and unemployment is not

clear. The paucity of data restricts research into how a worker

becomes unemployed. More detailed investigations on the

activities of the labor force are necessary to implement more

effective improvements, as is more detailed research into the

activities related to labor slack.
Monthly Labor Review April 2002 41

Notes

ACKNOWLEDGMENTS: Thanks go to Yuichi Tozuka, an economist formerly at the Sumitomo Life Research Institute and currently working

at the Sumitomo Life Insurance Company, for assisting with data

collection, estimation, and tabulation for this article. Thanks also to

Constance Sorrentino, an economist in the Division of Foreign Labor

Statistics, and Steven E. Haugen, an economist in the Division of Labor

Force Statistics, both of the Bureau of Labor Statistics, for providing

data and for their helpful comments. Any errors, of commission or

omission, are, of course, solely mine.

1

 U.S. business cycle expansions and contractions are reported by

the Business Cycle Dating Committee of the National Bureau of Economic Research.

2

 In Japan, stock prices and land prices appreciated greatly during

the late 1980s and the beginning of the 1990s. For example, the Nikkei

Stock Average 225 reported by Nihon Keizai Shimbun, Inc., recorded

12,556 yen in 1985 and 38,915 yen, its highest value ever, at the end

of 1989. Similarly, the Urban Land Price Index reported by the Japan

Real Estate Institute (1990 = 100) recorded 61.7 in March 1985 for

nationwide commercial areas and 111.7, its highest value ever, in September 1991. The growth rates of both of these indexes exceeded the

growth rate of nominal GDP. However, prices have fallen in the 1990s:

the Nikkei Stock Average 225 was down to 17,160 yen in 2000, and the

Urban Land Price Index also was down, to 51.6 in March 2001.

3

 Japan’s business cycle expansions and contractions are determined

by the Working Group of Indices of Business Conditions of the Japanese Government Cabinet Office.

4

 In Japan, “restructuring,” as applied to private companies, usually

means “reducing the number of employees without reforming the firm’s

management system.”

5

 A number of economists use the term “lifetime employment” or

“lifetime commitment” instead of “long-term employment.” Strictly

speaking, “lifetime” is incorrect, because firms do not guarantee employment for the entire lifetime of a worker.

6

 The CPS is conducted jointly by the Bureau of Labor Statistics and

the Bureau of the Census.

7 For detailed information on the CPS revisions, see Sharon R.

Cohany, Anne E. Polivka, and Jennifer M. Rothgeb, “Revisions in the

Current Population Survey Effective January 1994,” Employment and

Earnings, January 1994, pp. 13–35.

8

 The Statistics Bureau was under the Management and Coordination Agency of the Prime Minister’s Office until the beginning of 2001.

The change is a result of the reorganization of ministries in the Japanese Government.

9

 The Special Survey was conducted in March until 1983 and in

February from 1983 to 1998. Since 1999, it has been conducted semiannually, in February and August, reflecting the seriousness of employment conditions in Japan.

10 The August results are not reported in this article, but are available, together with background data, upon request.

11 Sorrentino pointed out the importance of this observation; see

Constance Sorrentino, “Japan’s low unemployment: an in-depth analysis,” Monthly Labor Review, March 1984, pp. 18–27.

12 The concept of “alternative unemployment rates” was proposed

by Julius Shiskin, who pointed out that it was not appropriate to apply

the official unemployment rate to every policy objective. (See Julius

Shiskin, “Employment and unemployment: the doughnut or the hole?”

Monthly Labor Review, February 1976, pp. 3–10.)

13 The new measures are explained in John E. Bregger and Steven E.

Haugen, “BLS introduces new range of alternative unemployment measures,” Monthly Labor Review, October 1995, pp. 19–26.

14 In its report on the CPS, the Levitan Commission criticized the

definition of discouraged workers and recommended revisions thereto.

See Robert L. Stein, “National Commission recommends changes in

labor force statistics,” Monthly Labor Review, April 1980, pp. 11–21.

15 Paul O. Flaim, “Discouraged workers and changes in unemployment,” Monthly Labor Review, March 1973, pp. 8–16, established a

fairly strong cyclical sensitivity in the number of discouraged workers.

Given his result, one might conclude that discouraged workers have

strong links to the job market and that they test the market periodically and are ready to jump back into it if they believe that jobs are

available. However, Flaim also found that more than half of discouraged workers had not looked for work in more than 1 year and that the

majority seldom test the job market. He concluded that only some

discouraged workers returned to work or resumed searching for a job.

(See Paul O. Flaim, “Discouraged workers: how strong are their links to

the job market?” Monthly Labor Review, August 1984, pp. 8–11.)

16 Cohany, Polivka, and Rothgeb used the former and current definitions of “discouraged workers,” CPS data, and the CPS parallel survey

and found that the estimated number of discouraged workers was reduced to about two-fifths the former count by the revision. They concluded that requiring jobseeking activity within the previous year contributed to a substantial lowering of the estimate of the number of

discouraged workers. (See Cohany, Polivka, and Rothgeb, “Revisions in

the Current Population Survey.”) Monica D. Castillo, “Persons outside

the labor force who want a job,” Monthly Labor Review, July 1998, pp.

34–42, pointed out that in the United States, only 45 percent of persons classified as discouraged workers in 1994 had become a part of the

labor force in 1995, but the labor force attachment of discouraged

workers had become stronger than before.

17 See Cohany, Polivka, and Rothgeb, “Revisions in the Current

Population Survey.”

18 The Ministry of Labor in Japan (which became the Ministry of

Health, Labor and Welfare in 2001) employed this method in order to

compare the official unemployment rates in the United States and

Japan in 1999. See “White Paper on Labor” (Tokyo, Ministry of

Labor, 1999), in Japanese; English summary available on the Internet

at http://www.jil.go.jp/bulletin/summary/index.htm.

19 According to International Labor Office recommendations, persons who are laid off, but who have a weak attachment to the labor

force (as in the United States), should be counted as unemployed,

whereas those who are laid off, but who have a strong attachment to

the labor force (as in Japan), should be enumerated as employed. (See

“Resolution concerning statistics of the economically active population, employment, unemployment and underemployment, adopted

by the Thirteenth International Conference of Labour Statisticians

(October 1982),” on the Internet at http://www.ilo.org/public/

english/bureau/stat/res/ecacpop/htm.)

20 See Constance Sorrentino, “International unemployment rates:

how comparable are they?” Monthly Labor Review, June 2000, pp. 3–

20.

21 According to the U.S. definitions, unpaid family workers who

work fewer than 15 hours per week are outside the labor force. Although, in Japan, the category of “family workers” might include some

paid family workers, all family workers who worked fewer than 15

hours per week are subtracted from the labor force in this adjustment.

22 The number of members in the Self-Defense Forces can be obtained from the “Defense White Paper,” published annually by the

Defense Agency. In the Regular Survey, Self-Defense Forces members

who reside in an official residence provided by the Defense Agency are

included in the labor force, but in the Special Survey, they are not. In

order to determine civilian unemployment rates, the number of mem-
Labor Resources in Japan and the U.S.

42 Monthly Labor Review April 2002

APPENDIX: Sorrentino’s studies

This appendix briefly examines some of the work of Constance

Sorrentino, an economist at the Bureau of Labor Statistics. Sorrentino

has published many studies comparing international unemployment

rates.1 Her studies are representative of the field, and her results are

accepted widely. Her studies on Japan are based on the former definitions and concepts of the CPS; she has not published any international studies based on the 1994 U.S. definitions.

In her 1983 article, Sorrentino compared the official unemployment rates, known as U–5 at the time, of the United States and Japan

from 1977 through 1980, using annual average data from the CPS and

using the March Japanese Special Survey. She also compared alternative unemployment rates U–6 and U–7 in both countries.

Sorrentino pointed out that Japan’s official unemployment rate

was underestimated slightly, but was still far below the U.S. official

unemployment rate, even after the adjustment to U.S. definitions

and concepts. She also pointed out that there was a noticeable difference in the adjusted unemployment rates for men and women in

Japan. This difference indicated that Japan’s official unemployment

rate was overstated for men and understated for women. Sorrentino

proposed that the reason for the difference was that, in Japan, men

account for most inactive jobseekers who are reported as unemployed, while women account for the majority of jobseekers who are

not in the labor force.

Sorrentino also demonstrated that broadening the concept of unemployment to account for persons working part time for economic

reasons (U–6) did not reduce the difference between the United

States and Japan, but that further broadening the concept to include

discouraged workers (U–7) made the unemployment rates of the two

countries converge. This means that Japan had larger proportionate

increases in unemployment, as measured by U–7.

In interpreting these results, Sorrentino cautioned that, because

March is a special month in Japan, Japanese firms traditionally take

on new workers on April 1, and new graduates are prepared to enter

the labor market on that date.

Sorrentino updated her results several times. In 1987, she analyzed data from the CPS and data from the Special Survey conducted

each February from 1984 through 1986. In 1989, the data she analyzed were from the CPS and from the Special Survey conducted each

February from 1984 through 1988. Together with Elder, in 1993 she

analyzed data from the CPS and from the Special Survey conducted

each February from 1984 through 1992. All of these studies confirmed her initial findings and, using the February data for Japan, left

her conclusions basically unchanged.

In 1993, Sorrentino compared the alternative unemployment rates

U–1 through U–7 of nine developed countries, including Japan. (Exhibit A–1 gives the definitions of the seven rates.) Using data from

February 1990 for Japan and 1989 for the other countries, she

pointed out that Japan’s adjusted official unemployment rate U–5

was still the second lowest among the countries studied. She also

demonstrated that Japan’s expanded unemployment rate U–7, encompassing persons working part time for economic reasons and

discouraged workers, was double the U–5 rate for men and quadruple U–5 for women.

In 1995, Sorrentino compared alternative unemployment rates

U–1 through U–7 for 10 developed countries, including Japan,

from 1983 to 1993. She expanded the length of the period studied

because measures such as U–1 through U–7 have a large cyclical

component and international relationships might change, depending on the phase of the business cycle in each country. The results

reinforced her 1993 findings.

Sorrentino gave an explanation for Japan’s higher relative ratio of

U–7 to U–5: under the country’s long-term employment system,

bers of the Self-Defense Forces must be subtracted from the labor

force. However, in the Special Survey, Self-Defense Forces members

who reside in private housing might be included in the labor force. In

consultations with the Statistics Bureau of Japan, Sorrentino learned

that half of the members of the Self-Defense Forces reside in private housing. (See Constance Sorrentino, “International unemployment indicators, 1983–93,” Monthly Labor Review, August

1995, pp. 31–50.)

23 U.S. data are from the BLS website, http://www.bls.gov/

webapps/legacy/cpsatab8.htm, which gives historical data on these

measures. The most recent data are found at http://www.bls.gov/

news.release/empsit.t08.htm. Data on the number of persons

working part time for economic reasons, by sex, are not available at

the website, so information was provided directly by the Bureau of

Labor Statistics.

24 In Japan, managers can legally dismiss employees with prior

notice, but judicial precedents require objective and rational reasons

that satisfy the following conditions: (1) the dismissal must be shown

to be necessary; (2) efforts must have been undertaken to avoid

dismissal; (3) the selection of those dismissed must have been carried

out on a rational basis; and (4) the dismissal procedure must have been

“appropriate.”

25 See, for example, Kazuo Koike, Shigoto no Keizaigaku (Tokyo, Toyo Keizai Shinposya), 1991; and T. Suruga, “Nihon Kigyo no

Koyo Tyosei,” in T. Suruga and H. Chuma, Koyo Kanko no Henka to

Zyosei Rodo (Tokyo, Tokyo Daigaku Shuppankai, 1997).

 26 James Brooke, “Young People Feel a Chill in Japan’s Hiring

Season,” The New York Times, Apr. 1, 2002, p. A3.

27 According to the Regular Survey conducted in 2000 in Japan,

there were 31,970,000 men employed in the nonagricultural sector.

Out of that number, only 8,430,000 were working in companies employing 500 or more workers. (The figures include part-time workers.)

28 A survey conducted in August and October 1998 by the Statistics

Bureau of Japan supports this idea. The survey was a supplement to the

Labor Force Survey and examined the job search activities of unemployed persons who lost or left their jobs in the previous year. The

survey revealed that among 1,840,000 unemployed persons, 1,050,000

were men and 790,000 women. Also,

1. of persons older than 45 years, 490,000 men and 230,000

women lost or left their jobs;

2. of persons who were engaged in jobs that did not require skilled

labor, 703,000 male non-white-collar workers, 240,000 female clerks,

and 230,000 female non-white-collar workers lost or left their jobs;

and

3. of persons who worked for small firms with fewer than 100

employees, 600,000 men and 430,000 women lost or left their jobs.
Monthly Labor Review April 2002 43

core workers employed by large and medium-sized companies are

mostly male and regular full-time workers shielded from unemployment through employment adjustments, while part-time workers

are mostly female or older workers. Such part-time workers tend to

exit the labor market and leave the labor force without falling into a

categorization of “unemployed.”

Sorrentino maintained that a substantial part of Japan’s labor

underutilization was attributable to discouraged workers and other

individuals who withdrew from the labor force and that these forms

of labor slack did not show up in the country’s official unemployment rate. She concluded that Japan’s labor market was unique in its

Footnote to the appendix

institutions and attitudes and that its structure was quite different

from that of the United States.

One important fact relevant to Sorrentino’s conclusions is that

the magnitude of the male-female difference in the adjusted official

unemployment rates had declined since 1984. The reduction in the

number of jobseekers not in the labor force contributed to the reduction in the male-female difference. The number of such jobseekers in

1984 was one-third that in 1980. The Special Survey was conducted

in March in 1980 and February in 1984. The number of jobseekers

not in the labor force was relatively small in February, especially

among women.

1

 See, for example, her Monthly Labor Review articles, “Japan’s

low unemployment: an in-depth analysis,” March 1984, pp. 18–27;

“Japanese unemployment: BLS updates its analysis,” June 1987, pp.

47–53; “Adjusted Japanese unemployment rate remains below 3 percent in 1987–88,” June 1989, pp. 36–38; “International comparisons of unemployment indicators,” March 1993, pp. 3–24; “International unemployment indicators, 1983–93,” August 1995, pp. 31–

50; and, together with S. Elder, “Japan’s low unemployment: a BLS

update and revision,” October 1993, pp. 56–63.

Rate Definition

U–1 Long-duration unemployment rate:

Persons unemployed 15 or more weeks

÷ civilian labor force

U–2 Job loser rate:

Job losers ÷ civilian labor force

U–3 Adult unemployment rate:

Unemployed persons aged 25 years and

older ÷ civilian labor force aged 25 years and older

U–4 Unemployment rate for full-time workers:

Unemployed persons seeking full-time jobs

÷ full-time labor force

Rate Definition

U–5 Official unemployment rate:

Total unemployed persons ÷ civilian labor

force

U–6 Rate encompassing persons working part

time for economic reasons:

Full-time jobseekers + 1⁄2 × part-time

jobseekers + 1⁄2 × persons working part

time for economic reasons ÷ civilian

labor force – 1⁄2 × part-time labor force

U–7 Rate adding discouraged workers:

U–6 plus discouraged workers in the numerator

and denominator

SOURCES: Constance Sorrentino, “International comparisons of unemployment indicators,” Monthly Labor Review, March 1993, pp. 3–

24; and John E. Bregger and Steven E. Haugen, “BLS introduces new range of alternative unemployment measures,” Monthly Labor Review,

October 1995, pp. 19–26.

Exhibit A–1. Alternative unemployment rates, U1 through U7