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The Japanese Employment System*1

January 28, 2000
Bank of Japan
Research and Statistics Department
Ryota Hattori *2 and Eiji Maeda *3

  • *1Views expressed in this paper are those of the authors and do not necessarily reflect those of the Bank of Japan or the Research and Statistics Department.
  • *2Research and Statistics Department, Bank of Japan
  • *3Research and Statistics Department, Bank of Japan

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" The long-term employment and the seniority-based wage, which are characteristics of the employment system in Japan, have been one of the factors hindering economic recovery." This criticism emerged in the mid-1990s and has grown as the economy deteriorated rapidly from the autumn of 1997. During the 1980s, however, it was said that the so-called Japanese Employment System was one of the main factors contributing to the economic success in Japan. Thus, the recent criticisms of the Japanese Employment System must be examined to see whether people merely blame the employment system for the stagnant economy and excess employment or if there are factors that impede the functioning of the employment system. From this viewpoint, we analyze the Japanese Employment System in this paper.