Work and Pay in the United States and Japan

By Clair Brown; Yoshifumi Nakata et al. | Go to book overview

Increased international competition has put pressure on U.S. firms to restrict the proportion of workers with income or job security and to increase the contingent work force. Similar pressures are at work in Japanese firms, and we expect this trend to become more visible as a secular adjustment when the Japanese recession ends. Overall, the labor market institutions in Japan have changed much more slowly than in the United States, and a much deeper economic crisis seems to be required before firms make adjustments in their practices to reduce costs. Even then, their adjustments tend to be marginal compared to the changes undertaken by U.S. companies facing intense global competition.

The 1990s recession has brought renewed emphasis to the benefits of employment security in the United States and to the costs of employment security in Japan. After analyzing the employee involvement, training, and wage systems, we will return in the concluding chapter to the question of what type of employment system, including security, would be effective in the United States, given its emphasis on mobility and individual autonomy and its macroeconomic institutions. We also discuss to what extent American (in)security practices are transferable to Japan.


NOTES
1.
Nondiscretionary expenditures are those that maintain a family's normal daily life and cannot be changed without disrupting the family's life-style. For a more complete discussion, see Vickery ( 1979).
2.
We distinguish this individual human capital, often referred to as general human capital, from organizational capital, which refers to skills and knowledge that are developed through experience on the job, are related to organizational activities, and are valuable only within the organization. Organizational capital includes relationships among employees; workers' knowledge of the firings culture and structure; workers' knowledge of rules and procedures; workers' experience in teaching certain skills to others; the firm's knowledge of workers' skills and talents; and proprietary knowledge (e.g., research-and-development secrets, financial data, supplier information). Although organizational capital might be thought of as specific capital, it is not solely embedded in one individual and may not become lost to the organization when that person quits or retires. Rather, organizational capital is embedded in groups and is learned incrementally. Therefore, the loss of capital to the organization when one individual leaves is quite small and can quickly be replaced with a minimal amount of job experience for the person who is transferred to the vacant job. However, if several people in a work group leave at one time, the training costs can be high since the natural training structure embedded in the work process has been destroyed.
3.
On the origins and dynamics of institutions in Japan, see Upham ( 1987) and Campbell ( 1992), and in the United States, see Jacoby ( 1985).
4.
These figures are for 1979, 1989, and 1991. The inflow is given as a percent of population aged 15-64 minus the unemployed; outflow is given as a percent of the total unemployed ( OECD, 1993a, pp. 88-89).

-61-

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Work and Pay in the United States and Japan
Table of contents

Table of contents

  • Title Page iii
  • Preface v
  • Contents ix
  • 1 - Comparing Employment Systems 3
  • Note 20
  • 2 - Security 21
  • Notes 61
  • 3 - Employee Involvement and Training 67
  • Introduction 67
  • Summary: Employee Involvement and Training in the Set Model 94
  • Notes 95
  • 4 - Pay Systems, Career Paths, and Earnings Inequality 97
  • Introduction 97
  • Summary and Major Findings 130
  • Appendix: Calculation of Standard Career Paths 132
  • Appendix: Calculation of Standard Career Paths 134
  • 5 - Employers and Unions 137
  • Notes 156
  • 6 - National Wage Determination in Japan 158
  • Summary 189
  • Notes 190
  • 7 - Conclusion 191
  • References 209
  • Index 227
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