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|کد مقاله||سال انتشار||تعداد صفحات مقاله انگلیسی||ترجمه فارسی|
|3723||2007||24 صفحه PDF||سفارش دهید|
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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Journal of the Japanese and International Economies, Volume 21, Issue 3, September 2007, Pages 379–402
This paper examines whether the failure to obtain regular full-time employment at the time of graduation has a long-term impact on subsequent employment status. Using micro data from the Japanese General Social Surveys and the job opening ratio (yuko kyujin bairitu) as an instrument for entry-level employment status, I show that the observed correlation between current and entry-level employment status produces a true causal link, which is not attributable to sorting on unobserved aptitude. I also discuss various underlying mechanisms including social institutions and stigmatization. J. Japanese Int. Economies21 (3) (2007) 379–402.
The recent growth of young people who are neither in full-time education nor in regular employment, the so-called “freeters,” has been drawing considerable attention as a major social phenomenon in Japan. More importantly, various economists (Mitani, 2001; Sakai and Highchi, 2005) have documented a strong correlation between the employment status at the time of graduation and employment prospects down the road. This observed correlation could in fact be causal, namely, that the employment status of the first job could have a real effect on employment prospects in the future. Nevertheless, the commonly accepted explanation for this correlation is that freeters are unable to commit to working. In economic parlance, the observed correlation is attributed to sorting by unobserved aptitude to regular employment. Despite this debate about freeters, the literature has not explored this important question in a rigorous way. This paper attempts to examine whether the adverse effects of failure to land a regular job at the time of graduation is spurious (due to unobserved heterogeneity) or real (causal). This paper addresses the endogeneity of employment status by using the instrumental variable method. Specifically, I use micro data of the Japanese General Social Surveys (JGSS), which contains recall data of the employment status of one's first job as well as current employment status. As an instrument for the employment status of a first job, I use the job opening ratio (yuko kyujin bairitsu) in the year of completing education. This strategy is similar to Neumark (2002): since the job opening ratio is a macro index of labor demand, it is independent of heterogeneity within a cohort. I also provide evidence against direct effects of the instrument of a cohort level. Even controlling for potential endogeneity, failure at labor market entry has a negative effect on the current probability of regular full-time employment. More precisely, people who failed to obtain a regular full-time job, due to lack of labor demand at the time of their entry, have a 40–50% less chance of having a regular full-time job at present. Given the aggregate level evidence for employers' preference for new graduates, this result is not surprising. However, most of the previous studies on the negative consequences of being a freeter, including Mitani (2001) and Sakai and Higuchi (2005), have treated initial employment status as exogenous. Therefore, they have been subject to the criticism that observed persistency in employment status might be due to sorting on individuals' preferences or abilities. To the best of my knowledge, this is the first paper addressing this point among the studies on freeters or youth employment stability in Japan. People who failed to obtain a regular job at entry continue to miss out on investments in employment-based human capital. Thus, increasing youth joblessness may harm the productivity of the Japanese work force in the long run. At the same time, rapid population aging means that, unless Japanese society accepts a huge number of immigrants, today's young workers must be relied upon to work to their full potential to support the economy. Consequently, deteriorating youth employment emerged as a major public concern in the early 2000s.1 Under these circumstances, it is beneficial to shed light on the prolonged unstable employment suffered by young people who stumbled at entry to the labor market. While Japan has been known for stable employment, it is true only for regular full-time employees. There is a clear distinction between regular full-time employees, called seishain in Japanese, and provisional employees. Provisional employees receive less protection by law, experience with almost double turnover rates and earn lower wages and lower returns to tenure.2 In this sense, provisional employment in Japan forms the secondary market defined by Doeringer and Piore (1971), with internal labor markets for regular employees corresponding to the primary market. When there is a barrier between the two labor market, a person's current employment status depends on her past employment status. It implies that access to the regular full-time job market is limited to new graduates and those who are already employed as regular full-time. Despite bleak prospects for provisional employees, there is some controversy over the cause of the recent increase in number of young provisional workers. As described by Hashimoto and Higuchi (2005), when the freeter phenomenon emerged in the 1980s, it was perceived that some youths shunned the life of full time jobs even though they were available. Although the freeter phenomenon was increasingly regarded as the result of demand deficiency in the prolonged recession of the late 1990s, there remains a persistent view which attributes the problem to a lack of employability of young people.3Genda (2001) casts doubt on such a view and argues that, under the condition of economic slump and aging workforce, employment protection of prime-aged men is putting a strain on young people. The empirical results of this paper supports the argument that the demand condition is an important cause; if the freeters were to voluntarily avoid regular employment or they were not qualified to find a full-time job from the beginning, no significant effect of failure at entry would be identified with controls for unobserved heterogeneity. A related issue is the persistent negative effect of a recession at the time of labor market entry in Japan. There is evidence that leaving school during a recession lowers a cohort's wage (Ohtake and Inoki, 1997), and causes a persistent increase in the probability of quitting (Genda and Kurosawa, 2001 and Ohta, 1998).4 This paper contributes to the literature on cohort effects in the sense that it shows an indirect effect of a recession at entry on future employment status. The plan of the paper is as follows. Section 2 discusses possible reasons for persistent negative effects of failure to obtain a regular full-time job at entry. Section 3 outlines the empirical model, clarifying what simple probit and IV methods identify. Details of the data are described in Section 4. I report my findings in Section 5: I begin with the pooled regression in Section 5.1. Section 5.2 examines the exclusion restriction of the instrument, and Section 5.3 conducts further analyses by gender and educational background. Section 6 concludes
نتیجه گیری انگلیسی
Employment status shows strong persistence in Japan. Using the labor market conditions at entry as an instrument, I conclude that the entry-level employment status actually has a considerable causal effect on current status. Furthermore, the instrumental variable exactly identifies persistent negative effects on people who by chance entered the labor force when the market was loose and failed to obtain regular jobs. Thus, this paper challenges the view that the poor performances of freeters can be attributed to their unwillingness to work and ineptitude for regular employment. Loss of skill or morale, if any, seems to be rather a consequence than a cause of being a freeter. A deteriorating youth employment situation could leave a lasting scar on the aggrieved generation. At the same time, a persistent effect of failure at entry gives a clue to understanding the known cohort effects on wages and mobility. When the opportunities for regular full-time employment are largely restricted to recent graduates, a large part of the labor market outcomes of each cohort would be determined at the timing of entry. If so, the labor market conditions in the year of entry may well have long-term effects on wages and mobility. Again, the distinction between a causal relationship and spurious correlation is essential because sorting on unobservable abilities within a cohort can also generate a positive correlation between past and current employment status. There are several potential reasons for the state dependence in employment status in Japan. Among others, I view the social institutions favorable to new graduates and the negative signaling effect as the primary causes, and they are mutually reinforcing. Typical employment practice of Japanese firms and the school-to-work transition system give advantages to new graduates. The social norm that everyone should obtain a regular job right after graduation stigmatizes those who could not obtain a regular job when leaving school. This negative signal prevents employers from hiring those who failed at entry and sustains the social institutions favorable to new graduates. The gap in effects of failure at entry between less educated group and more educated group supports this interpretation, although the small sample size limits ability to perform detailed analysis by demographic group or cohort. An important reservation is that this paper does not reflect the drastic changes after the economic crash in the late 1990s, because those who left school after 1998 are completely excluded from the data. The sudden fall in the proportion of regular full-time workers might have changed the structure of the labor market. It is ambiguous which direction the change was in the short run; on one hand, it might weaken the signaling effect, on the other hand, lack of job opportunity might rather aggravate the effect. In the longer term, everything else being equal, labor shortage due to shrinking youth population might make it easier to find a regular full-time job even for those who lack experience. However, it is precipitant to be optimistic because the supply-driven positive effect may be canceled out if the demand for regular full-time workers also decreases. The deep recession in the late 1990s triggered various changes in the Japanese employment practice, and their consequences are still undetermined. How the undergoing changes in the labor market have affected the consequence of initial disadvantage will be an important topic for future investigation after further data is accumulated.