Send message to Author

Paper short abstract:

The digital transformation of the economy has changed the relationship between employers and employees. In Japan, employment has shifted towards “job-based models,” creating demands for new forms of welfare. Japan’s concurrent shift towards a more compact workforce may accommodate these demands.

Paper long abstract:

The 21st century has experienced two major disruptions: the massive demographic shift of ageing and shrinking populations in most industrialized economies, and the digital transformation of the global economy with its introduction of autonomous systems, machine learning and ubiquitous inter-connectivity. This paper considers the deep interconnectivity between these two phenomena and its implications for capitalism globally by examining Japan’s transitioning employment practices and welfare needs as a case study. Japan is ideally situated to serve this purpose due to its concurrent position as the global frontrunner in demographic change.

The digital transformation has changed the nature of employer-employee relationships by creating stronger demands for specialists in high-skilled jobs. Japan’s historical practice of lifetime employment, which typically hired a generalist and bred a jack-of-all-trades in-house, is no longer able to meet the demands of the new digital economy. Employers need to hire high-skilled specialists for task-specific jobs while outsourcing more of their education and training to outside institutions. These jobs are time specific and frees employers from the burden of over-employment. Employees, on the other hand, desire greater job mobility and the ability to market their specialized skills to multiple employers for competitive, performance-based compensation. These complimentary needs have created a “job-based model” of employment increasingly embraced by younger generations of workers.

This “job-based model” of employment in turn has created demands for new forms of welfare based on the individual as opposed to the employer. High-skilled workers seek welfare schemes with greater depth of coverage often provided by the private sector, while low-skilled workers seek welfare schemes with cheaper and broader coverage more often provided by the state. Fortunately for Japan, these changing demands come at a time of rapid demographic change when the workforce and overall population are both shrinking, creating opportunities for adaptation and adjustment.

Send message to Author

Paper short abstract:

I conduct the first systematic study of the effects of amakudari on firm-level outcomes. Using differences-in-differences methods, I show that following bureaucratic hires: (1) firms receive larger government loans, (2) firms receive stock price boosts, and (3) NPOs receive higher value contracts.

Paper long abstract:

A growing literature has established the high value of legislative connections to firms. Connections to political office holders are associated with boosts in operating profit margins; size of government loans received; probability of default; share prices; and likelihood of corporate bailout. However, political office is not the only form of government connection firms can leverage. Firms also regularly hire civil servants. Notably absent from the studies above is an examination of returns to office from these bureaucratic connections.

Using newly collected data that records the first non-bureaucracy position occupied by all former civil servants in Japan, I first shed light on the descriptive patterns of employment of former civil servants. I show that (1) amongst publicly traded firms, industries reliant on government contracts—such as transportation—and highly regulated industries—such as banking and insurance—are overrepresented in hiring compared to the overall economy, and (2) nonprofit organizations (NPOs) hire roughly one-third of former bureaucrats.

Next, I combine the data of revolving door hires with newly constructed datasets of all government loans to private firms, firm stock prices surrounding bureaucratic hires, and all government contracts with NPOs in Japan over a period of one decade to test for benefits that accrue to organizations that hire former bureaucrats. Using various differences-in-differences approaches, I find that (1) the volume of government loans increases in the years following a bureaucratic hire, (2) firms receive stock price boosts following high-ranking bureaucratic hires, and (3) the value of contracts negotiated between government agencies and NPOs are higher in years when former bureaucrats are on staff.

Send message to Authors

Paper short abstract:

This study sought to understand the determinants and effects of Chief Financial Officers (CFOs) in the Japanese corporate sector by conducting quantitative analysis with the data from the Japanese listed firms from 2004 to 2021.

Paper long abstract:

Chief financial officers (CFOs) are considered the financial stewards of their companies and arguably second in importance only to the Chief Executive Officer (CEO) in corporate hierarchies. Despite the importance of the CFO position, at least in U.S. firms, very little attention in academia has been paid to the role a CFO plays in corporate finance, especially in Japan. In fact, the appointment or the use of the title CFO is a relatively recent phenomena in Japan where 10% of the listed firms in Japan have their CFOs in 2021 compared 2.5% in 2004. Drawing on the theoretical lens of institutional logics, this paper seeks to empirically examine determinants and effects of the CFOs in Japanese listed firms. We use the financial data and annual reports of the listed firms from 2004 and 2021 for the panel data and difference in difference analyses. Our panel data analysis reveals two key determinants of the presence of CFOs, the disclosure of annual reports in English and the degree of institutional shareholding. Our difference in difference analysis finds no clear impact of the presence of CFOs on their corporate performance such as ROE. These results imply that CFOs play a role in communicating with domestic and overseas shareholders but the CFOs has little impact on their own firm performance.

Send message to Author

Paper short abstract:

Japan's Science, Technology and Innovation (STI) policy is under increased pressure due to declining scientific performance and intensified geopolitical tensions. Thus, the Japanese government aims at dynamic changes. This paper examines measures, priorities and challenges to effectively transform Japan's innovation system, using recent data from a "Performance Monitoring” project.

Paper long abstract:

Science, technology and innovation are critical to Japan's economic competitiveness. In recent years, Japan's scientific performance has declined and the Japanese government is increasingly aware of the risk of being left behind in international competition. The Covid-19 pandemic has revealed several weaknesses in Japan, particularly in the field of STI. The fact that Japan was not involved in the development of Covid vaccines that were brought to the market had a significant shock effect on the Japanese government. International studies have identified Japan's weak integration into international research networks as one of the primary reasons behind this weakness. The Japanese government openly acknowledges this and other weaknesses of the country's innovation system and emphasises the urgent need for STI reforms to bring Japan back on a successful track. Implementing the “Society 5.0” concept of an inclusive and (digitally) interconnected society is one of the priorities.

Geopolitical tensions, intensified by the war in the Ukraine, are contributing to an accelerated shift of Japan's STI policy. This shift includes protecting and expanding Japan's technological sovereignty vis- à-vis China in key areas, increasing R&D cooperation with partner countries such as the USA and European countries that share similar values, and focusing on basic research and disruptive innovations. As a result, the Japanese government has presented a series of new reform proposals and is revising its strategies in the fields of AI, quantum technologies, bio- and material sciences. Overall, the Japanese innovation system is expected to undergo dynamic changes in the coming years.

This paper examines Japan's STI policy reform measures and priorities and the challenges ahead to effectively transform Japan's innovation system. This paper uses recent data from the project “Asia-Pacific Research Area (APRA) Performance Monitoring“, jointly carried out with colleagues from Fraunhofer ISI, GIGA and DAAD, and funded by the German Federal Ministry of Education and Research (BMBF).