Economic Restructuring and Social Mobility in Japan

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DESCRIPTION (provided by applicant): Since the burst of its "bubble" economy in 1989, Japan has experienced an astonishingly long and severe economic recession, featuring just 1.3% average real growth per year between 1990 and 2005. This decade and a half of economic stagnation is thought to have compelled Japanese corporations to abandon their well- known "permanent employment" practices, adopt downsizing, and increase their use of contingent employment contracts. Such changes are likely to fundamentally reshape Japan's system of social protection and hence affect its citizens' lifetime economic conditions. The overall goal of this research project is to estimate the consequences of Japan's transformation on individuals' economic mobility and wellbeing. Japan presents a unique opportunity to study how variations in national labor market characteristics affect individuals' life chances in a single-country setting, where the findings are unlikely to be confounded by the cultural traits that are difficult to measure in multi-country studies. I will investigate whether industrial restructuring has increased economic inequality in the Japanese population by analyzing changes in employment stability and income distribution with data from the Social Stratification and Social Mobility Survey (SSM). The SSM was the first to collect detailed work and life history information from a nationally representative sample of Japanese men and women for the entire period of economic stagnation. Because individuals' long-term job prospects affect their rates of marriage, divorce, and childbearing, as well as their health, results of this study will have important implications for future research on these topics. In particular, the study will contribute to understanding Japan's rapidly changing demographic conditions, including the increasing postponement of marriage, declining fertility, the rising divorce rate, and the growing prevalence of psychological depression, as well as the relation between economic and social changes in postindustrial societies in general. More specifically, first, this project will provide evidence for whether and how Japan's permanent employment system has been dismantled by systematically analyzing changes in workers' rates of intrafirm job shifts, employer changes, and employment exits. Second, event history models based on Japanese adults' work and life histories through 2005 will be used to investigate whether economic downturns have increased individuals' risks of financial instability over the life course. I will also compare the consequences of Japan's recession for individuals of different gender, age, educational, and occupational groups. In doing so, this research will be the first to demonstrate the impact of economic restructuring on social inequality in Japan. Finally, I will use information on current income from the SSM conducted in 1985, 1995, and 2005 to identify the effect of Japan's labor market changes on the economic returns to men's and women's human capital, life-course stages, and job characteristics. The overall goal of this project is to estimate the consequences of Japan's economic stagnation and restructuring on the social mobility and long-term well being of its population. Because individuals' lifetime economic prospects affect their rates of marriage, divorce, and childbearing, as well as their health, results of this study will contribute to understanding Japan's rapidly changing demographic conditions, including the increasing postponement of marriage, declining fertility, the rising divorce rate, and the growing prevalence of psychological depression. By identifying the macro-institutional processes that shape individuals' risks of economic instability, this project will also have important implications for research on the well being of families and children in postindustrial societies in general.