Thursday, 24 October 2013

Odd Japanese labour markets

Am I the only one who read the various stories on impending social collapse in Japan and reckoned there to be a potentially large opportunity for a firm that would be happy to hire women on flex-time arrangements?

Tyler pointed to one story yesterday; another hit the Washington Post today. Short version of both: Japanese labour markets are a disaster. Employers expect that a woman getting married has shifted to the mommy track and so pull her from opportunities for advancement, because she's likely to leave work after childbirth. And they're not wrong: the Guardian story says 70% of women leave work after having had a kid. Women wanting to have a career then don't get married.

Suppose that were all that were going on. We'd then expect some clever firm would figure out that there are tons of qualified women itching to get back into the labour market on flex-time arrangements and would hire them on a compensation bundle including less salary, on-site daycare*, and flex-time. Further, the peculiarities of the Japanese labour market could really work to such a firm's advantage. If you expect that a firm will dump you post-kid, then you don't make relationship-specific investments with that firm pre-kid. If you expect that you can flip to a decent flex-time arrangement post-kid, you work much harder for the firm pre-kid. And while the "job for life" norm seems to be abating in Japan, I'd be surprised if it were less true there than elsewhere.

So, why isn't this happening? First explanation: work norms. Where everyone's expected to put in really long hours, and where a firm has a mix of 16-hr workers and 7.5-hr workers, there's really no choice but to sideline the 7.5-hr workers onto the slow-track. But surely that's somewhat question-begging: it seems pretty improbable that you get that more output from one worker on 16-hour days than from two workers each on 8-hour days (who are on the same hourly but different annual total pay). And even if the 16-hour worker is more productive than two 8-hour workers, you could then just pay the 8-hour worker proportionately less.

Next explanation: The Guardian says kids are unaffordable unless you're on two incomes, but it's impossible to be on two incomes. Tokyo's expensive, but it's not the world's least affordable place. Beijing, Rome, Mumbai, London and Paris all come out worse on this index. But, where that index is conditioned on disposable incomes, and where salaries are based on crazy-long hours, then affordability could be a serious issue for those wanting to move to sane work hours. Maybe this part starts sorting itself out as homeowners die off faster than houses depreciate. Housing prices then fall rapidly as supply starts exceeding the number of people.

I can imagine a story where tight space constraints in Tokyo combined with pretty strong work norms have folks bidding up housing prices until it's pretty tough to afford a spot big enough for a family without two incomes with long work hours. But that story then conflicts with survey data that has money and housing as trivial reasons for not marrying; the Post story reports instead that "Do not feel the necessity" and "Do not want to lose freedom or comfort" were the main reasons given by both sexes for not marrying. And wanting to enjoy hobbies or entertainment was a slightly more commonly given reason for not marrying than wanting to concentrate on work or studies.

Maybe we need a Japanese translation of Bryan Caplan's book on low-effort parenting. The integral under the kid marginal-benefit curve is a lot bigger if you figure out ways of continuing to enjoy freedom and comfort.

Update: Brennan MacDonald points out that visas for domestic guest workers are much more difficult in Japan than in Singapore; if it's much harder to get a nanny, then that too helps explain female labour supply differences.

* Daycare availability seems a serious problem.


  1. Planet Money did a short 5 minute piece on the same issue. They talked about the difficulty of getting childcare (lots of red tape). But also the cultural norms (including long hours) that obstruct mothers working.

  2. There may be considerable more social pressure in Japanese society on a Japanese mom to stay at home than here in New Zealand. This social pressure would come from the mom's peers, her husband, his peers and colleagues, the couple's in-laws, the neighbors, the general media... (you get the picture). The role of a Japanese mom is well prescribed and relatively comfortable (you fit like a cog into a well-oiled social machine).

    Japanese women are generally very well educated and media-savvy. They are well-aware of the changes taking place in Japanese society. I believe they are making decisions based on their own interests.

    Given the choice of being a "salary man" or a "housewife," I would much rather be a "housewife." You have control of your life if you are the latter; whereas the former is little more than a hamster in a corporate wheel that never stops.

  3. Interesting issue, and interesting post. I agree with the two previous commenters who point to social mores - Jane Condon's 1985 book A Half Step Behind: Japanese women of the '80s, is still well worth reading in this regard. And you're right, there are opportunities for firms to capitalise on the current state of affairs. When I worked in Tokyo (1982-84), foreign banks were able to hire the (female) pick of the graduate Japanese crop, because the Japanese banks were hugely biased towards hiring men. True story: I was shown around the forex dealing room of a top Japanese bank by the guy who managed it. "Big operation", I said. "Yes", he said, "we've got 23 people here. Seventeen dealers, and six women".