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Since the 1990s, there has been a rapid increase in the proportion of temporary workers in the Japanese workforce. This paper empirically explores a linkage between the shift from permanent to temporary workers in the Japanese manufacturing sector and economic globalization, using various industry level data. The authors find that FDI and/or outsourcing tend to encourage the replacement of permanent workers with temporary workers in home production. In addition, they find that industries with higher exports are the most aggressive in replacing permanent workers with temporary workers.
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