Job Creation and Destruction in Japan, 1991–1995

Abstract

Using microdata from the Employment Trend Survey, this paper investigates job creation and destruction in Japan between 1991 and 1995. Among its findings is that the gross job creation rate fell and the gross job destruction rate rose during the period. The job reallocation rate was higher than the net creation rate. The job creation, destruction, and reallocation rates were lower for regular, full-time, and male workers than for temporary, part-time, and female workers. The job reallocation rate due to births and deaths of establishments was comparable to that due to growths and declines of continuing establishments in the overall economy while job flows in manufacturing occurred more by growths and declines than by births and deaths. A negative relationship can be clearly observed between gross job flow rates and employer size, and job creation and destruction were concentrated in small establishments and small firms. Unobservable idiosyncratic factors played a dominant role in determining the establishment-level employment growth. There were simultaneous worker inflows and outflows at both growing and declining establishments. In addition to hiring and separation, transferring employees across establishments of one firm responded to job gains and job losses. At least 16% of separation was due to job destruction while more than 18% of hiring was caused by job creation.J. Japan. Int. Econ.,March 1998,12(1), pp. 1–23. Gakushuin University, Faculty of Economics, 1-5-1 Mejiro Toshima-ku, Tokyo 171, Japan.Copyright 1998 Academic Press.Journal of Economic LiteratureClassification Numbers E24, J23, J63.