Abstract
Although research on immigrants in the US provides strong evidence that human capital is more important than social capital in determining their wages, data from Hamamatsu, Japan indicates that social capital variables are the primary determinant of immigrant earnings and human capital does not have a significant effect. The divergent impact of these two variables on the earnings of immigrants are a result of the different economic and social conditions that immigrants encounter in Japan compared to the United States. In a recent country of immigration like Japan where immigrant labor markets are relatively undeveloped and foreign workers are confined to unskilled, marginal jobs, the human capital that they acquire over time is not reflected in better jobs with higher earnings. In contrast, immigrants with access to social capital in the form of immigrant networks, gender, and ethnicity are able to obtain jobs with higher wages in Japan. Because foreign workers are still temporary target earners, they therefore rely heavily on their immigrant social networks to find better-paying jobs. In addition, Japan is a country with significant gender and ethnic discrimination where employers strongly prefer male foreign workers and ethnically similar nikkeijin (Japanese descendants born and raised abroad) and are willing to pay them significantly higher wages. Therefore, depending on the local context of immigrant reception, the relative importance of human versus social capital in explaining economic outcomes among immigrants can vary considerably.
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Notes
There is some research that examines gender differences among US immigrants in the use of social networks to find jobs, which can have an indirect impact of wages (Greenwell et al. 1997; Livingston 2006; Repak 1993). A number of scholars have argued that ethnic solidarity is one determinant of immigrant entrepreneurial success (Light and Bonacich 1988: 18–19; Sanders and Nee 1996).
The log of monthly earnings enables us to interpret the estimated coefficients as a percentage.
Age is a continuous variable that ranges from 17 to 75 years old. Education is defined as years of schooling (0–66 years). Years with current employer is a continuous variable ranging from 1 to 32 years. Finally, language is a dichotomous variable with speaks Japanese/English well or very well (coded as “1”) and speaks Japanese/English not well or not at all (coded as “0”).
A dummy variable defines the use of a broker to acquire a job (reference) compared to those who did not use a broker or who used another source, such as an agency or labor union (coded “0”). The use of a friend, relative, or previous employer as social capital is coded as “1”, compared to those who used another source or none at all (coded “0”). Married is defined as married (coded as “1”) or not married, which includes single, divorced, widowed, or common-law relationship (coded as “0”). Male is a dichotomous variable defined as male (coded as “1”) or female (coded as “0”). There are two ethnic dummy variables for each city. Nikkei is an ethnic group classification that includes Japanese descendants who have been admitted to Japan under special visa categories (coded “1”). Non-nikkei respondents are (coded as “0”). The variable, Mexican, includes Mexican-origin respondents working in the US, (coded “1”) or non-Mexican-origin (coded as “0”).
Time in Japan/US is a continuous variable that ranges from 1 to 600 months. Legal status is defined as a dummy variable for the category of working in the host-country legally (reference) or illegally (coded as “0”). Hours worked per week is a continuous variable that ranges from 1 to 80 h. Industrial sector in Japan is defined as a series of dummy variables for the categories of manufacturing, construction, or services. The reference sector is the manufacturing sector, which has the lowest average wages. It was not possible in the case of Hamamatsu workers to match characteristics of the firm in which they are employed with the workers, except for the broad sector of the economy to which the firm belongs. The United States industrial sector includes ten dummy variables for agriculture, high-tech, construction, hotel, restaurant, landscape, apparel, food service, low-tech, and miscellaneous service. The reference sector is the restaurant sector, which has the lowest wages for entry-level workers.
Earnings are in 1997 US dollars (¥130.6 = $1.00). For the purposes of this paper, foreign workers’ earnings are compared within each country, rather than across each country.
This is based on the number of people registered as foreigners in Japan plus those illegal immigrants who have overstayed their visas (who do not register with municipal governments). It excludes the approximately 430,000 Korean Japanese who are born and raised in Japan but are still registered as “foreigners” because they are not granted citizenship and have not naturalized. They are “special permanent residents,” but are not immigrants.
On the evolution of the return migration of Brazilian nikkeijin to Japan, see Tsuda (1999).
Male and female workers are combined in the multivariate analysis of earnings, with gender included as an explanatory variable. The additional consideration of gender in our discussion and analysis of wages is important, since gender is used as an indicator of social capital and therefore contributes to the substantive argument presented here.
There are also some similarities in the results from the two countries when we examine the impact of the control variables. Legal status (working legally or illegally) is not a significant predictor of wages in Hamamatsu or San Diego. Apparently, immigration control policies do not have much effect on the wages of foreign workers and are therefore not a major determinant of immigrant labor market incorporation (cf. Reitz 1998: 69, 238). Finally, the industrial sectors in which foreign workers are employed contribute to earnings outcomes. While it was not possible to measure sectors consistently across countries, foreign workers in Japan in the service sector earn significantly more than those employed in manufacturing and construction.
This is also reflected in our foreign worker sample. A majority of the immigrants from Hamamatsu have been in Japan for less than 5 years whereas approximately half of the immigrants in San Diego have been in the US for over 10 years.
37% of the nikkeijin have received at least some college education.
Educational levels for non-nikkeijin immigrants are even higher than the nikkeijin with 57% having received at least some college education.
As a result, 75% of the employers surveyed claim that there is no difference in the jobs performed by foreign and native workers. Only 14% indicate that foreigners do less skilled work (Table 4).
Among non-nikkeijin foreign workers, only 4% found their current jobs through labor brokers. Among those Japanese employers who hire only non-nikkeijin workers, only 17% use brokers and 61% hire them directly.
41% of all foreign workers in our sample were employed directly by Japanese companies.
In one survey of nikkeijin workers by the Japan Statistics Research Institute, 48.5% of those employed by brokers had changed jobs, while the percentage was only 21.2% for those employed directly (Yamamoto 1994).
The nikkeijin initially intend to stay in Japan only 2.6 years on average.
The inability of human capital to influence immigrant wages in Japan also explains why increased age does not result in higher wages either (again in contrast to the San Diego situation). Since the previous background of the immigrant is not considered when hiring, older workers (with more educational and occupational experience) are not given better jobs with higher wages. Instead, both older and younger immigrants are employed in similar unskilled jobs at the entry level with comparable wages. In San Diego, age is correlated with higher earnings. However, for older immigrants, time spent in the United States has a less positive impact on wages compared to younger immigrants.
The fact that 64% of our San Diego immigrant sample are permanent settlers is probably one reason why their use of social networks to find jobs does not increase earnings. Unlike temporary migrant target earners, long-term immigrant settlers generally do not dedicate their lives exclusively to work and maximization of earnings and instead become more concerned with quality of life issues and general social well-being (cf. Tsuda 1999). As a result, they may not be using their social networks only to obtain jobs with higher wages but to find ethnically satisfying work conditions at firms whose work force includes clusters of relatives and friends, even if wage levels are somewhat lower. For instance, many immigrant-owned businesses in San Diego with co-ethnic immigrant labor forces tend to pay lower wages (Cornelius 1998: 122–125) but have labor turnover rates that are lower than in American-owned businesses, which suggests that the incentives of working at a firm with ethnic peers where one can communicate in the native language offsets any economic disadvantages.
Japanese female labor participation rates continue to exhibit an “M” pattern where women mainly work before marriage, quit their jobs once they marry, and then re-enter the labor force after they are finished raising children.
Although most women work full-time before marriage, over half of married women are in part-time jobs (Ogawa and Retherford 1993: 727).
Japan has ratified the 1985 UN Convention on the Elimination of all Forms of Discrimination against Women (CEDAW) and has a domestic law that forbids workplace gender discrimination.
Certain manufacturing industries that require more physically demanding labor tend to rely more on male nikkeijin workers. As expected, most nikkeijin workers in heavy manufacturing and construction are men.
During the height of the Japanese labor shortage in the late 1980s, companies sometimes offered such amenities as furnished apartments, free utilities, free plane tickets to Brazil (for visits), and other perks to retain their nikkeijin workers.
However, because nikkeijin workers are not regular employees who are paid bonuses and benefits, overall, they are significantly cheaper to employ than Japanese workers.
See Tsuda (2003) for an in-depth discussion of the ethnic reception of the Brazilian nikkeijin in Japan.
According to Ministry of Labor surveys, the proportion of part-time workers steadily increased from 7% of all workers in 1970 to close to 20% in 1999. The increase has been especially notable among women. For instance, in 1980, there were only 5,403,000 part-time female workers, whereas by 1992, the number had jumped almost threefold to 14,456,000.
Japanese companies (especially the larger ones) generally do not layoff excess workers but usually rely on natural attrition (waiting for workers to retire or quit). Other means include encouraging early retirement and moving unnecessary workers to subsidiary firms. This inability of companies to sufficiently downsize and streamline their workforces has been one major reason why the Japanese economy suffered from a decade-long recession.
In contrast to regular Japanese workers, foreign workers hired on short-term contracts or temporarily borrowed from labor brokers are more cost-effective because they generally command lower hourly wages, are not paid bonuses or other benefits, and can be quickly dismissed during a decline in production.
63% of all immigrant workers in our sample reported that they had already remained in Japan longer than they initially intended.
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Tsuda, T. When human capital does not matter: local contexts of reception and immigrant wages in Japan. GeoJournal 76, 641–659 (2011). https://doi.org/10.1007/s10708-009-9315-4
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DOI: https://doi.org/10.1007/s10708-009-9315-4