INSTITUTIONAL CHANGE IN JAPAN JAPANESE LIFETIME EMPLOYMENT A.pdf

INSTITUTIONAL CHANGE IN JAPAN JAPANESE LIFETIME EMPLOYMENT: A CENTURYS PERSPECTIVE by Chiaki Moriguchi and Hiroshi Ono Working Paper 205 September 2004 Postal address: P.O. Box 6501, S-113 83 Stockholm, Sweden. Office address: Sveavägen 65 Telephone: +46 8 736 93 60 Telefax: +46 8 31 30 17 E-mail: japan@hhs.se Internet: http://www.hhs.se/eijs 1 Institutional Change in Japan Japanese Lifetime Employment: A Centurys Perspective (Forthcoming in Institutional Change in Japan: Why It Happens, Why It Doesn’t . Edited by Magnus Blomström and Sumner La Croix.) Chiaki Moriguchi, Northwestern University and NBER chiaki@ Hiroshi Ono, Stockholm School of Economics hiroshi.ono@hhs.se Date of Revision: July 8, 2003 Abstract The economic stagnation in the 1990s in Japan posed a serious challenge to the practice of “lifetime employment.” Despite pessimistic predictions, however, empirical studies have found no major changes to the practice pertaining to core employees. Why does lifetime employment persist in Japan? This paper develops a conceptual framework motivated by personnel economics and sociology and explores the persistence and stability of Japanese lifetime employment from a historical perspective. In this paper, we view lifetime employment as a set of interdependent human resour