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Import Competition and Manufacturing Employment in Japan

November 2007
Hitoshi Sasaki*1

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This paper investigates the effects of increased import competition on Japanese manufacturing employment at the four-digit industry level from the mid 1990s to the early 2000s. The estimation results of a labor demand equation indicate that decreases in import prices are closely related to the decline in employment in labor-intensive industries exposed to severe import competition. This suggests that import competition is a key factor in explaining the harsh employment situation observed in the Japanese manufacturing sector since the mid 1990s.

import competition, import prices, labor demand equation, import-competing industries

JEL Classification Number:
E24, F16, J23

I am especially grateful to Ayako Kojyu and Taisuke Imai for their capable assistance. I would also like to thank Naohito Abe, Kyoji Fukao, Hideo Hayakawa, Masahiro Higo, Yoichi Matsubayashi, Koji Nakamura, Masaru Sasaki, Katsuyuki Takiguchi, Eiichi Tomiura, seminar participants at the Japan Industrial Policy Research Institute, attendees at the Japan Economic Association 2007 Spring Meetings, and other officials of the Bank of Japan for their helpful comments and suggestions. Of course, I am solely responsible for any remaining errors. The views presented in this paper are those of the author and not the Bank of Japan.

  • *1 Research and Statistics Department (currently International Department), Bank of Japan


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