Business Intelligence

Quality Of Labor, Capital, And Productivity Growth In Japan: Effects Of Employee Age, Seniority, And Capital Vintage

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Executive Summary

An aging population, low fertility rate, and suppressed corporate investment have left Japan with an older workforce and older vintages of fixed capital. To restore economic dynamism, Japan must encourage productivity growth. Using panel data of listed Japanese firms in FY 1977 - 2008, this paper demonstrates how both employee age and capital vintage affect the quality of labor and capital that influence productivity. Negative effects of increasing non-regular workers should be addressed, and it is further important for Japanese firms to organize and manage labor skills and enhance knowledge, rather than depend on technology accumulated over time.

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