Long-Term Employment and Job Security over the Past 25 Years

Abstract

The authors document and contrast changes (or lack thereof) in job stability over the past 25 years between Japan and the United States. Prime-age male workers with at least five years of tenure in Japan continued to enjoy much higher job stability than did their U.S. counterparts. Most remarkably, Japan’s “Lost Decade” had little discernible adverse effect on the job stability of this group of Japanese employees. By contrast, job stability for mid-career hires and youth workers deteriorated in Japan. The authors’ cross-national regression analysis of job loss confirms the consistently more important role that seniority plays in protecting workers from job loss in Japan than in the United States and reveals that this gap in seniority’s influence on job stability between the two countries widened. Overall, it is the U.S. economy with the longest economic expansion, not the Japanese economy with the longest economic stagnation, that experienced deteriorating job stability, pointing to the absence of convergence of the Japanese and U.S. systems.