Labour Segmentation in Interwar Japan

Abstract

The origins of the postwar subdivision of the labour market, into distinct submarkets, demarcated on the demand side in terms of specific contracts offered workers, and on the supply side in terms of distinctive signals about expected levels of effort capacity and costs of being trained, lie in the interwar period. To assert this is not to deny that economic and social institutions dating back to the Tokugawa period and even earlier are of no importance to an understanding of origins of postwar Japanese labour market practices. Indeed, to search for origins is to embark on a journey backward through history to which there is no obvious and predetermined final resting point. But in my view it is first and foremost during the interwar era that one comes upon institutions of labour market subdivision sufficiently similar to those of the postwar era, and sees labour market outcomes resulting from their operation of sufficient similarity to the outcomes of the postwar period, for us to refer to the interwar period as the formative era for the system dominating the four decades after 1950. In making this argument I emphasize the emergence of dualism between the combined sectors of agriculture and light industry on the one hand, and heavy industry on the other. In the former sector wages were relatively low, and archetypical labour market contracts tended to be either of either the family firm or the small-commercial-firm type. In the latter sector wages were significantly higher and archetypical labour market contracts tended to be the large firm type.