Discussion Paper No.1212
Title:Do the Activities of Overseas Affiliated Companies Promote Japanese Employment?
Authors:Sachiko KAZEKAMI
Abstract :
This study analyzes whether the activities of overseas affiliated companies
promote Japanese employment. It compares the effect from these activities and the
effect of outsourcing to unaffiliated companies and segments activities of overseas
affiliated companies by sales destinations. Public concern that outsourcing abroad
collapses Japan's domestic labor demand exists; however, counterarguments state no
clear-cut evidence of this phenomenon and instead state that moving local production
abroad arguably promotes Japanese labor demand.
We construct our data by matching four governmental surveys and estimating
firm fixed effect analyses. Our findings are as follows. First, the effect of increasing
imports of intermediate inputs is slightly greater than the effect of increasing sales of
overseas affiliated companies. Second, increasing sales to Japan decreases the demand
for less-educated workers and short-term workers in manufacturing. However,
increases in local sales and sales to third countries increase the demand for more highly
educated workers in service sectors. Third, the coefficient of wage indicates the
complementary effect between less-educated and more highly educated female workers
and workers in overseas affiliated companies and the substitute effect between
less-educated male workers and workers abroad.
JEL codes: F16, J23