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The Balance-of-Payments (BoP) constraint is one of the most important determinants of growth in developing economies. More specifically, since developing countries cannot issue the international currency and usually face liquidity constraints in international financial markets, they tend to adjust their current account to the availability of foreign finance. In such a process, both the exchange rate and the GDP growth rate are constrained to produce the adjustment of the current account to the international financial conditions.
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.
