Long-term effect of displacement in Japan in Japan Mayu FUJII, - PowerPoint PPT Presentation

Long-term effect of displacement in Japan in Japan Mayu FUJII, NIPSSR Ryo KAMBAYASHI, IER, Hitotsubashi University 16 th May, 2013 the Conference for the launch of the OECD Analytical Report on Displaced Workers

Sketch of talk 1. The role of displacement in the Japanese economy 2. What we know about the Japanese displacement 3. New dataset 4. Preliminary results a. Methodology: how to set the control group? b. Basic results c. How to interpret the tenure effect 5. Remarks and discussions

T Turnover ratio ti (% of employment stock, 1971-2011, ETS published data)

S Separation ratio by reason ti ti b (% of employment stock, 1971-2011, ETS published data)

S Separation ratio by reason ti ti b (% of employment stock, 1971-2011, ETS published data)

1 The role of displacement in the 1.The role of displacement in the Japanese economy  Compared to the stock of unemployment, hiring/separation has been relatively stable.  The average frequency of involuntary separation is not so high (3.9% as average btw 1971 and 2011). hi h (3 9% b 1971 d 2011) Traditionally, we have regarded the displacement as a minor issue in our labor markets.

1 The role of displacement in the 1.The role of displacement in the Japanese economy  Since 1990s, the frequency of involuntary separation has grown up, and this trend seems to be corresponded to the increase in stock of unemployment.  Th d  The dual labor market in Japan. l l b k i J Displacement has become a major issue Q. Does the displacement create a long ‐ term inefficiency? Q. If it does, are there policies to remedy the negative effect?

2 What we know about the Japanese 2.What we know about the Japanese displacement  Data constraint • Previous literature heavily depends on cross ‐ sectional datasets datasets • ETS; Employment Trend Survey, an establishment survey to capture labor flow in each establishment. • ESS; Employment Status Survey, a household survey to retrospectively track the one ‐ year transition of employment status. We use the information from governmental administration; pension enrolment records.

2 What we know about the Japanese 2.What we know about the Japanese displacement  Timing of displacement (Kambayashi and Kato, 2012) • ESS v.s. DWS in the U.S. • Long tenure protects workers from displacement in Japan (but not in recent US). • Demographic attributes (gender age) affects the probability Demographic attributes (gender, age) affects the probability to be displaced in Japan (but not in the US). Displacement in Japan is not randomly allocated among workers, but concentrates in particular group (elder, female, less tenured workers).

2 What we know about the Japanese 2.What we know about the Japanese displacement  Effects of displacement (Bognanno and Kambayashi, 2013; Kambayashi and Kato, 2012; Bognanno and Delgado, 2008; Abe et al., 2002) • Rehiring probability of displaced workers within one year is • Rehiring probability of displaced workers within one year is also affected by demographic attributes such as age, gender, and education. • One ‐ shot wage penalty of displacement is higher in aged and long tenured workers. University graduates are likely to lose wage more. wage more. Duality of labor market may have affected the effects of y y displacement. But in long ‐ term?

2 What we know about the Japanese 2.What we know about the Japanese displacement  Therefore, it is important to confirm the long ‐ term effect of displacement in Japan, in order to deepen the argument on duality (flexibility) of labor market.

3.New datasets  LOSEF (The Japanese Longitudinal Survey on Employment and Fertility) • Random sampling survey in 2011 (sample size 6000 between d l ( l b age of 30 and 59). • With pension enrolment records since their first job With pension enrolment records since their first job • Pension enrolment records include the whole history of base monthly salary in April (as the contribution of pension) and the name of employer. • When they change their employer, we ask industry, occupation contracting term title of each job and reason occupation, contracting term, title of each job, and reason and training of each job change (max. 45 years).

3.New datasets  LOSEF (The Japanese Longitudinal Survey on Employment and Fertility) • Household information (marital status, birth of children, h ld f ( l b h f h ld cohabitation with parents) can be used in each year. • Because the information on monthly salary is based on the Because the information on monthly salary is based on the administrative records, it is relatively more accurate compared to other retrospective survey. • Microdata may be available for academic use, with an English manual in http://takayamaonline.net/pie/stage3/English/d_p/E2012.html

3.New datasets  Downside of LOSEF • LOSEF salary history covers only one of three main pension systems in Japan systems in Japan • Kosei Nenkin Hoken (Employee’s pension) 35m in 2011 • Kyosai Nenkin Hoken (Public sector’s pension) 4m in 2011 • Kokumin Nenkin Hoken (Self ‐ employed and others) 30m in 2011 • Sample is heavily biased to standard workers in private sector. Nonstandard workers are not likely to participate in KNH (but Nonstandard workers are not likely to participate in KNH (but they are likely in Kokumin Hoken). The condition to participate in KNH has gradually widen. Recently it is more l k l likely to include nonstandard workers than before. l d d d k h b f

3.New datasets  Downside of LOSEF • Monthly salary is so called “Standard monthly compensations” compensations” • excludes bonus and extra allowance • classified into 47 class (‘under 63000JPY’ to ‘over classified into 47 class ( under 63000JPY to over 1.17mJPY’) with various widths. The widths also have been changed from time to time.

S Separation ratio ti ti (% of employment stock, 1971-2011, LOSEF and ETS published data)

Di Displacement ratio l t ti (ratio to employment stock, 1971-2011, LOSEF and ETS published data)

4 Preliminary results 4 .Preliminary results a. Methodology: how to set the control group?  Measure the wage penalty of displacement for longer ‐ term.  Sample restriction i. Exclude if experienced voluntary quit. ii. ii E Exclude if displaced within three year tenure. l d if di l d ithi th t iii. Exclude if worked as nonstandard worker at least in one point of career (tentative). po t o ca ee (te tat e) iv. Exclude if multiple displacement (tentative). v. Exclude if unemployment spell exceed one year (tentative).

4 Preliminary results 4 .Preliminary results a. Methodology: how to set the control group?  “0” if continuously employed  “d0=1” if displaced  “dn t =1” t year before displacement, “dp t =1” t year later from displacement y p p y p 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0 0 0 0 dn1 d0 dp1 0 0 0 0 0 0 0 0 0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0 0 0 0 dn1 d0 dp1 0 0 dn1 d0 dp1 0 0 0 0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0 0 0 0 0 0 0 dn1 d0 dp1 0 0 0 0 0 0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

4 Preliminary results 4 .Preliminary results a. Methodology: how to set the control group?  “0” if continuously employed  “d0=1” if displaced  “dn t =1” t year before displacement, “dp t =1” t year later from displacement y p p y p 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0 0 0 0 dn1 d0 dp1 0 0 0 0 0 0 0 0 0 0 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 0 0 0 0 0 0 0 dn1 d0 dp1 0 0 0 0 0 0 0 1991 1991 1992 1992 1993 1993 1994 1994 1995 1995 1996 1996 1997 1997 1998 1998 1999 1999 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 2005 2005 2006 2006 2007 2007

4 Preliminary results 4 .Preliminary results a. Methodology: how to set the control group?  “0” if continuously employed  “d0=1” if displaced  “dn t =1” t year before displacement, “dp t =1” t year later from displacement y p p y p 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 ya ya ya ya ya ya ya ya ya ya ya ya ya ya ya ya ya 0 0 0 0 dn1 d0 dp1 0 0 0 0 0 0 0 0 0 0 yb yb yb yb yb yb yb yb yb yb yb yb yb yb yb yb yb 0 0 0 0 0 0 0 dn1 d0 dp1 0 0 0 0 0 0 0 yc yc yc yc yc yc yc yc yc yc yc yc yc yc yc yc yc