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Japan's low unemployment: economic
miracle or statistical artifact?
Koji Taira
If official statistics on employment and unemployment are any guide to the degree of labor market efficiency, the performance of the Japanese labor market is almost miraculous.
In the late 1960s, the official unemployment rate averaged 1.1 percent. Even after the challenge of the OPEC oil embargo in 1973 which halved Japan's economic growth rate and brought about drastic structural changes, the unemployment rate has rarely risen above 2.5 percent. However, some people emphasize the doubling of the unemployment rate within a few years after 1973. In fact, during much of the 1950s when no one thought that Japan was in full employment, the official unemployment rate was similar to the rate after the OPEC embargo, slightly above 2 percent.
Today, people readily discount the problem of unemployment: thanks to the rise in individual incomes and the progress in social insurances, the same rate of unemployment today means much less hardship than before. But if the rate of unemployment indicates the degree to which an economy's labor force is underutilized, anyone who remembers the poor state of labor force underutilization during the 1950s would consider today's similar unemployment rate alarming. The mystery of Japan's unemployment statistics is that they do not seem to reflect this alarming situation.
In this article, we propose to shed some light on this mystery by examining the ways in which unemployment is defined and counted in Japan. Also included are brief discussions on male and female unemployment, unemployment by age, and labor redundancy.
This excerpt is from an article published in the July 1983 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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