Internal Labour Markets, Incentives and Employment PDF
Preview Internal Labour Markets, Incentives and Employment
INTERNAL LABOUR MARKETS, INCENTIVES AND EMPLOYMENT Also by Isao Ohashi THE THEORY OF LABOUR MARKETS Also by Toshiaki Tachibanaki LABOUR MARKET AND ECONOMIC PERFORMANCE: Europe, Japan and the USA (editor) PUBLIC POLICIES AND THE JAPANESE ECONOMY: Savings, Investments, Unemployment, Inequality WAGE DETERMINATION AND DISTRIBUTION IN JAPAN WAGE DIFFERENTIALS: An International Comparison (editor) Internal Labour Markets, Incentives and Employment Edited by Isao Ohashi Professor of Economics Nagoya University Japan and Toshiaki Tachibanaki Professor of Economics Institute of Economic Research Kyoto University Japan 9& First published in Great Britain 1998 by « MACMILLAN PRESS LTD Houndmills, Basingstoke, Hampshire RG21 6XS and London Companies and representatives throughout the world A catalogue record for this book is available from the British Library. ISBN 0-333-66673-9 First published in the United States of America 1998 by fifi ST. MARTIN'S PRESS, INC., Scholarly and Reference Division, 175 Fifth Avenue, New York, N.Y. 10010 ISBN 0-312-21193-7 Library of Congress Cataloging-in-Publication Data Internal labour markets, incentives and employment / [edited by] Isao Ohashi and Toshiaki Tachibanaki. p. cm. Includes bibliographical references and index. ISBN 0-312-21193-7 (cloth) 1. Labor market—Japan. 2. Labor market—United States. 3. Labor market—Europe. 4. International division of labor. I. Ohashi, Isao, 1945- . II. Tachibanaki, Toshiaki, 1943- . HD5827.A6I55 1997 331.12'0952—dc21 97-38225 CIP Selection, editorial matter and Chapter 1 © Isao Ohashi and Toshiaki Tachibanaki 1998 Chapter 3 © Souichi Ohta and Toshiaki Tachibanaki 1998 Chapter 11 © Isao Ohashi and Hiroshi Terayama 1998 Chapters 2, 4-10 © Macmillan Press Ltd 1998 All rights reserved. No reproduction, copy or transmission of this publication may be made without written permission. No paragraph of this publication may be reproduced, copied or transmitted save with written permission or in accordance with the provisions of the Copyright, Designs and Patents Act 1988, or under the terms of any licence permitting limited copying issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE. Any person who does any unauthorised act in relation to this publication may be liable to criminal prosecution and civil claims for damages. The authors have asserted their rights to be identified as the authors of this work in accordance with the Copyright, Designs and Patents Act 1988. This book is printed on paper suitable for recycling and made from fully managed and sustained forest sources. 10 9 8 7 6 5 4 3 21 07 06 05 04 03 02 01 00 99 98 Printed and bound in Great Britain by Antony Rowe Ltd, Chippenham, Wiltshire Contents Preface vii Notes on the Contributors viii 1 Introduction 1 Isao Ohashi and Toshiaki Tachibanaki Part I Wages 2 Wages and Labour Market Institutions in International Comparison 19 Coen Teulings and Joop Hartog 3 Job Tenure versus Age: Effects on Wages and the Implication of Consumption for Wages 49 Souichi Ohta and Toshiaki Tachibanaki Part II Bargaining and Incentives 4 Fighting for Turf in an Internal Labour Market 81 H. Lome Carmichael 5 Decentralised Personnel Management 98 Hideshi Itoh and Osamu Hayashida 6 A Model for Patterns of Industrial Relations 126 Shigeru Wakita Part III Employment Policy 7 Hiring Risky Workers 143 Edward P. Lazear 8 Employer Learning and the Signalling Value of Education 159 Joseph G. Altonji and Charles R. Pierret 9 Employment Adjustment in Japanese Firms: Negative Profits and Dismissals 196 Terukazu Suruga v vi Contents Part IV The Internal Labour Market 10 Is Japan's Long-Term Employment System Changing? 225 Hiroyuki Chuma 11 Intra-Firm Mobility, Wages and Promotion in the Japanese Employment System 269 Isao Ohashi and Hiroshi Teruyama 12 German Job Mobility and Wages 300 Klaus F. Zimmermann A Historical Note: Does History Matter? 333 Konosuke Odaka Index 337 Preface Preliminary versions of the papers included in this book were presented at the Conference 'Internal Labour Markets, Incentives and Employment', held at Lake Biwa, Japan, in July 1995. The conference was organised by Isao Ohashi and Toshiaki Tachibanaki, and financed by the Kansai Economic Research Centre, and we are indebted to the Centre for its support. This volume is the second English publication in the Biwako Conference series. The first was published by Macmillan in 1994 - Labour Market and Economic Performance: Europe, Japan and the USA. We are grateful to Macmillan for continuing to publish the Biwako Conference series. The Biwako Conference has been held every year for the more than thirty years, and it is known as one of the most prestigious conferences for economists in Japan. It occasionally organises the international confer ence. Financial support has always been provided by the Kansai Economic Research Centre, and we are very grateful to the Centre for its continuing support. This conference volume focuses on the subject, 'Internal Labour Markets, Incentives and Employment'. The book is concerned with the relationship between the role of internal labour markets and economic incentives, both macro and micro, and the effect of internal labour markets on employment adjustment, including new hires and discharges. The volume includes both theoretical and empirical works, and the editors believe that it will provide readers with much useful insight and under standing of the subject covered. Finally, the editors would like to express their gratitude to the following individuals - Messers Tetsuro Kawakami (the former President of the Kansai Economic Research Centre), Yasuo Shingu (the President of the Centre), Kosaku Yoneda (the Executive Director of the Centre), Professors Chikashi Moriguchi (Tezukayama University) and Toshihisa Toyoda (Kobe University) - for their advice and support. ISAO OHASHI TOSHIAKI TACHIBANAKI vn Notes on the Contributors Joseph G. Altonji is Professor, Department of Economics, and Faculty Fellow, Institute for Policy Research, at Northwestern University, USA. His research has focused on the nature of labour market fluctuations, labour supply, consumption, the effects of immigration on the labour market, the returns to job seniority, intergenerational links in income and consumption, information and the labour market, the economics of educa tion and econometric methods. He is a Research Associate of the National Bureau of Economic Research and a Fellow of the Econometric Society. H. Lome Carmichael is Professor of Economics and Head of the Department at Queen's University in Kingston, Ontario, Canada. He is an Editor of the Journal of Labor Economics and an Editorial Board member of the American Economic Review. He has been studying labour market institutions for many years, and has published papers on seniority rules, promotion contests, academic tenure and Japanese practices such as multi- skilling. Recently he has been examining evolutionary models of prefer ences, and has written on gift-giving practices and the role of territorial behaviour in the establishment of property rights and in bargaining theory. Hiroyuki Chuma is Professor of Economics, Faculty of Economics, at Hitotsubashi University, Japan. He is interested in labour economics and the economics of insurance, and has contributed numerous articles in these fields. He has published Labour Economics (in Japanese) and co-edited Economic Analysis of Life Insurance (in Japanese). Joop Hartog has been Professor of Microeconomics at the University of Amsterdam since 1981. He was Associate Professor at Erasmus University, Rotterdam, and visitor at various universities in Europe and the USA. His main fields are labour economics, econometrics and micro economics, and he has contributed many articles in these fields. He edited Labour Market Institutions and Contracts: A Cross-national Comparison and he is currently the co-editor of Labour Economics: An International Journal. Osamu Hayashida is Lecturer at Osaka Keizai University, Japan. His main fields of interest are the delegation of authority and task assignment Vlll Notes on the Contributors IX over management of human assets in organisations by means of the incomplete contract approach. He has written several articles on the field. Hideshi Itoh is Associate Professor of Economics at the Institute of Social and Economic Research, Osaka University, Japan. He is an Associate Editor of the Journal of the Japanese and International Economies, the International Economic Review, and a co-editor of Journal of Economics and Management Strategy. He has written numerous articles on contract theory, human resource management and organisation theory. Edward P. Lazear is Jack Steele Parker Professor of Human Resources Management and Economics at Stanford University, USA. Before teaching at Stanford, he spent nineteen years teaching at the University of Chicago. He is the founding and current editor of The Journal of Labor Economics and the current president of the Society of Labor Economists. He has written or edited seven books and over 100 articles. His expertise is in labour economics and microeconomics with an emphasis on the economics of personnel. In addition to his academic work he has served and an advisor to a number of governments. Konosuke Odaka is Professor of Economics and Economic History, Institute of Economic Research, at Hitotsubashi University, Japan. He has written many books and articles in both Japanese and English, including Labour Market Analysis, as well as a large number of articles on labour economics and economic history. His current interest is Asian economic development and economic history. Isao Ohashi is Professor of Economics at Nagoya University, Japan. Previously he was Associate Professor of Economics at Nagoya City University and at Tsukuba University. He has written extensively on theoretical and empirical economics and labour economics. His publications include The Theory of Labor Markets (in Japanese). Souichi Ohta is Assistant Professor of Economics at Nagoya University, Japan. His main field of interest is labour economics, especially the inter nal labour market in the firm, wage determination and labour turnover. He has written several articles on the field. Charles R. Pierret is a research economist in the Office of Economic Research and Program Development in the Bureau of Labor Statistics, US
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