The end of the ”Japanese employment system” (JES) has recently become a widely shared idea, in a context of increasing pressures. Indeed, whereas firms responded slowly to macroeconomic and institutional changes since the beginning of the 1990s, an accelerating adjustment seems to take place since 1998, as the crisis is lasting and maybe worsening. The two pillars of the so-called Japanese employment system are concerned: the seniority wage system and, above all, the compromise on employment security. However, there is an increasing gap between the statements pronounced by the case studies at the micro level, which conclude to dramatic changes, and the macro level analyses, which insist on the global stability of the wage labor nexus. This micro-macro paradox is one of the main results of Boyer and Juillard (1998). The 2001 massive restructuring in the electrical machinery sector is one example of these changes. This is all the more important from the point of view of the analysis of the Japanese employment system that firms belonging to this sector, like Matsushita, are considered to have implemented the so-called lifetime employment in the most accomplished way. Moreover, the electrical machinery sector is particularly affected by contemporary pressures on the employment system, such as the impact of technologies of information and communication or globalization.
In this context, the study of the employment adjustment in Japanese firms is a good way to measure the current changes in the Japanese employment system and their determinants . It gives us the opportunity to empirically specify the two alternatives of the preceding debate. More precisely, the issue at stake is to check if the characteristics of the adjustment model, especially the speed, have changed since the beginning of the 1990s. In fact, this question has already been the focus of many empirical works. A first type of study has been conducted at the industry and macro levels (Abraham and Houseman, 1989, Hashimoto, 1993). The basic results can be summarized as follows. First, the adjustment speed in Japan is slower than in the US, whatever the type of estimates we consider. Second, in Japan, the adjustment speed in the first part of the 1990s is slower than in the 1970s. Then it appears that these studies do not confirm the alleged end of life-employment system during the 1990s.
More recently, many studies have used firm based micro-data and partially questioned the results obtained at the macro level (Chuma 2002, Abe 2002, Suruga 1998, Hildreth and Ohtake 1998). The main findings are the following. First, if the path of employment adjustment appears to be continuous and linear at the macro level, it rather seems to be discontinuous and non linear at the micro level. This statement could explain why the adjustments are very rapid and intense under certain conditions, which have to be defined. This may also be at the origin of the micro-macro paradox as defined above: the fact that some firms are restructuring heavily must not be automatically interpreted as the sign of the end of long term employment practices. Second, for certain firms, the rule of employment adjustment is influenced by the occurrence of negative profits. Finally, non negligible differences in the mode of adjustment are observed across firms, in terms of speed of adjustment, factors at the origin of the employment adjustment or in qualitative instruments used to adjust employment. This last result leads to put into question the idea of the uniqueness of human resources management model in Japan. Then, the questions are to relate these differences of employment adjustment to fundamental characteristics of the firms, to ask whether this heterogeneity across firms has recently increased or not, and finally, in any case, to explain these evolutions.
The heterogeneity of the employment adjustment across firms is precisely at the center of our own contribution, which consists in deepening the micro type studies. More precisely, we propose to test two conflicting hypotheses: the end of lifetime employment, which can be observed through an identical acceleration of the adjustment speed for all firms, versus an increasing heterogeneity of the employment adjustment across firms. Moreover, is this heterogeneity a purely statistical artifact, due to the resort of micro-data? Conversely, if the heterogeneity is real, what are its causes?
For this purpose, we use an original sectorial database, the NEEDS-FQ database (Nikkei Economic Electronic Databank System - Financial Quest). It gives micro-data from a sample of 126 firms of the electrical machinery sector on an annual basis from 1970 to 2001. Thus, our study is at an intermediate level by comparison with the majority of existing micro studies, some focusing on a few firms (Chuma, 2002, Suruga 1998, Hildreth and Ohtake 1998), and the others using huge samples of more than 1000 firms, but strictly limited in the temporal dimension and/or in the number of the tested explanatory variables (Abe 2002). We believe that this intermediate level provides an opportunity to overcome these limits. More precisely, our study has the following features. First, we use a panel framework to test and analyze the heterogeneity of employment adjustment patterns across firms. Contrary to the majority of empirical studies we do not limit our analysis to the introduction of individual effects. Rather, we resort to a Bayesian estimation procedure, which yields to (firm-specific) individual forecasts of the parameters of the adjustment process. Second, we make a comparison between the 1970s and the 1990s. Third, we try to identify the factors at the roots of both the level of employment adjustment and the heterogeneity of this adjustment; we especially focus on the financial factors by controlling firms’ characteristics like the size or the industry.
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