Overview

This chapter examines some basic labor statistics that will help one better understand the changing nature of the Japanese labor market. After briefly reviewing the history of the labor market since World War II, we analyze in depth the secular increase in the unemployment rate during the 1990s, which was the fundamental problem of the Japanese labor market during the so-called lost decades. We find that labor flows and unemployment spells play an important role in the long-run increase in the unemployment rate. Further, we examine the issue of the Japanese employment system, characterized by a long-term employment relationship and a steep wage-tenure profile. It is shown that, in the long-run, job-worker attachments have become weaker and wage growth within a firm has been stagnant. The chapter goes on to provide a bird’s-eye view of a recent crucial change in the Japanese labor market: the rising proportion of non-regular workers. This chapter also summarizes the findings of the subsequent chapters and discusses some policy implications of this book as a whole.