Abstract
By using a unique dataset on managerial-level employees who were transferred from Japan to European branches of the same global firms, we examine what would happen to work hours when a worker moves from a long-hour-working country to relatively shorter-hour countries. Even after controlling for business cycles, unobserved individual heterogeneity, job characteristics, and work hour regulations, we find a significant decline in Japanese work hours after their transfer to Europe, resulting from working-behavior influences of locally hired staff. We also find that the reduction in hours worked highly depends on the extent of the workers’ interactions with local peers.
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Notes
Nickell (2006) also maintains that there is yet no clear, simple theory that consistently explains the cross-country pattern of labor inputs. Both Alesina et al. (2006) and Faggio and Nickell (2007) indicate that tax rates alone can explain only a small amount of the differences in work hours. They are also skeptical of cultural differences, since Europeans worked more or less the same as, or even somewhat longer than, Americans before the 1970s.
Alesina et al. (2006) term this effect the social multiplier. They suggest that both high taxes and direct pressure to work less brought about by a combination of strong unions, generous welfare benefits, and social democratic governments during the 1970s and 1980s served as a coordination device to reduce work hours in European countries; also see Glaeser et al. (2003).
According to the Japan Chamber of Commerce in Dusseldorf (Japanische Industrie- und Handelskammer zu Düsseldorf e.V.), the 2009 membership of Japanese firms was 566 in Germany and 316 in the UK, whereas that of France was 263 and that of Italy 191.
The possibility of recall bias must be considered. See Limitations section for our reservation.
By using the number of work hours per week (we here denote as H) and the amount of paid leave (we denote as PL), we calculated the annual hours worked in the following manner: H*(365/7) - (H/5)*(PL). In Robustness Check section, we also take into account the difference in the number of national holidays among the three countries.
The technical channel effect depends on the nature of the production process, that is, whether the production process involves team work. If it is individual production, the direction of the technical channel effect can be reversed if the presence of coworkers induces counter-productive socialization. To address this aspect, we distinguish whether a respondent’s job involves team production in our empirical analysis.
Here, we assume that Japanese managers and their non-Japanese counterparts act as complements to one another. However, we could not exclude the alternative possibility where European managers work less and as a consequence, Japanese managers have to work for longer hours to cover for them. Although we do not have relevant information to address this possibility directly, we take this possibility into account when interpreting our empirical results in Convergence to Local Worker Levels section.
Bell and Hart (1999) suggest that teamwork is one of the possible factors that explain the existence of unpaid work.
The term nemawashi means laying the ground work, which originally comes from the practice where one must dig around the roots for a year or two before transplanting a tree.
The KHPS, sponsored by the Japanese government, is a longitudinal survey of individuals conducted by Keio University every January since 2004. It has a broader coverage than any such survey in Japan. The survey randomly selects 4,000 individuals from the entire Japan-resident population (male and female) in the age group of 20 to 69 years using two-stage sampling. According to Kimura (2005), no significant differences are found in the distribution of major variables compiled from the KHPS survey questions compared with other official statistics of Japan.
Although not shown, we confirmed that the balancing property is satisfied when estimating the propensity score.
As shown in column (7) of Table 2, the selection correction based on propensity score weighting is found to change the result of the key variables slightly.
Since this survey does not contain information on changes in family attributes before and after moving to Europe, we simply employ the level of family attributes instead. However, note that excluding these variables does not change our main results.
In this paper, we use the term presenteeism to imply the expectation on the part of employers that their employees be present at work regardless of whether any work is available or accomplished.
We obtained similar results in Table 6, even when we considered other specifications for the reference level of hours worked: (1) the sample average of log hours worked by locally hired UK or German managers, or (2) the counterfactual hours worked derived by estimating the hours-worked regression h k = Z k δ L + ν k by using the observations of locally hired UK or German managers k, and using the estimate \( \widehat{\delta} \) L to derive the predicted hours worked of worker i. See Kuroda and Yamamoto (2011) for more details. We also attempted to utilize different types of functional forms apart from the polynomial function, but the results presented in Table 6 best fit our data.
One may believe that the results of this paper have been obtained just because Japanese workers are conformists and therefore similar phenomenon may not be observed among workers of other nationalities. This is an open question to be addressed in future research. However, some studies in psychology show that there are no differences in nature among nationalities once all the relevant factors are controlled for. For example, from two experiments conducted in the United States and Japan, Yamagishi et al. (1998) show that once the relevant variables (such as degree of social uncertainty and the level of general trust) are controlled, the American and Japanese do not exhibit differences in their tendencies to voluntarily form committed relationships.
In general, the personnel department in Japanese firms has a great deal of power and influence compared with that of western firms. With regard to the general practices of the personnel department in Japan, see Jacoby (2005). He indicates that the number of people working in the personnel department of Japanese firms per 100 employees is, on average, almost double that of American firms.
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Data used in this paper are taken from a survey that the authors administered to workers of global Japanese companies operating either in the UK or Germany, and the longitudinal data from the Keio Household Panel Survey (Keio University). The authors deeply appreciate Shunichiro Bessho, Yuji Genda, Toshihiro Ihori, Akira Kawaguchi, Daiji Kawaguchi, Katsuyuki Kubo, Ryo Nakajima, Keisuke Nakamura, Fumio Ohtake, Hideo Owan, Ryuichi Tanaka, Dan Sasaki, Hiroki Sato for their valuable comments. The remaining errors are solely of our own. This research is supported by the Japanese government's Grants-in-Aid for Scientific Research [C] (Japan Society for the Promotion of Science; Research No. 25380372 <Kuroda> and Research No. 23530289 <Yamamoto>), Program for Promoting Social Science Research Aimed at Solutions of Near-Future Problems "Creation of Employment System that enables Lifelong Growth for All People" (commissioned by the Ministry of Education, Culture, Sports, Science and Technology) and Program of Intergenerational Equity (the grants from the Ministry of Education, Culture, Sports, Science and Technology). A data appendix with additional results, and copies of the computer programs used to generate the results presented in the paper, are available from the corresponding author at yamamoto@fbc.keio.ac.jp.
Appendix. Typical Feature of the Japanese Transfer System: Information Obtained During Interviews with Japanese Managers in the UK and Germany
Appendix. Typical Feature of the Japanese Transfer System: Information Obtained During Interviews with Japanese Managers in the UK and Germany
In Japan, it is common that the transfers to overseas branches are assigned by the personnel departmentFootnote 17 at the company headquarters; therefore, it is barely likely that workers move out of their own choices. This is the typical practice, established in the 1960s and 1970s, for Japanese firms. The practice of transferring workers without their consent was initiated during the economic downturn by relocating workers from a bad-performing section/department/establishment to a good-performing one to adjust personnel costs and avoid redundancy. Furthermore, to efficiently relocate workers from one place to another, many firms gradually adopted such practices on a routine basis. By the mid-1980s, such practices came to be endorsed by the Supreme Court (July 14, 1986), which decreed against an employee who was dismissed from a firm for refusing the firm’s orders to move establishments and ruled the dismissal as being effective.
Although the length of appointment depends on each firm’s personnel policy, most of the managers answered that the average is approximately 3 to 5 years. There are some workers who are transferred from one country to another one other than Japan, but most workers are transferred from Japan and back after several years.
Since the transfers are not made according to the workers’ wish but assigned by the firm, transferred workers are guaranteed the same conditions, including salary, managerial practices, pay systems, and paid leave as they had in Japan. Specifically, firms basically assure transferred workers the same level of annual after-tax net income, which indicates that we do not necessarily have to consider the differences in salary, tax rates, and other aspects of the social insurance system between Japan and the UK/Germany. Similarly, the managerial practices and other labor conditions (such as the amount of paid leave given to workers) are essentially the same as those of workers in Japan. Thus, we do not take into account the differences in such conditions before and after the transfer to the UK/Germany. However, with regard to performance assessment, many firms employ a dual system in European branches; each worker’s performance is first assessed by his/her boss in the same establishment, reported to the personnel office at the headquarters, and the final assessment is made by the personnel office. To take account of the possible changes in the first-tier assessment practices by bosses in the company’s European branches, we utilized information on whether practices of performance assessment at the workplace changed after moving to European branches for the analysis.
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Kuroda, S., Yamamoto, I. Do Peers Affect Determination of Work Hours? Evidence Based on Unique Employee Data from Global Japanese Firms in Europe. J Labor Res 34, 359–388 (2013). https://doi.org/10.1007/s12122-013-9164-2
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DOI: https://doi.org/10.1007/s12122-013-9164-2