Eiichi Tomiura

The impact of import competition on Japanese manufacturing employment

Although previous studies of the effect of imports on Japanese employment relied on relatively aggregate data, the variability among industries is substantial within each two-digit sector. This paper exploits recently available longitudinal data of 390 manufacturing industries and controls for industry-specific factors at the four-digit level. This paper finds the significant impact of import price changes on Japanese employment. The estimates suggest that substantial share of average employment decline can be accounted for by the intensified import competition and that the employment sensitivity increases with industry import share. All these findings are significant especially for the yen appreciating recession years.

Offshoring and Trade in East Asia: A Statistical Analysis*

Japanese shares of export and manufacturing value-added in the global market have declined significantly, whereas those in China have risen sharply. This paper examines how recent increases in offshoring by Japanese firms relates to the changes in the composition of export, the structure of national production, and the international distribution of manufacturing value-added in Japan, China, East Asian countries, the United States, and European countries, on the basis of our original survey of Japanese firms offshoring and the statistics of export and manufacturing production of these countries. It also discusses how the net cost saving of offshoring due to wage differentials and institutional factors will affect the sustainability of Japanese offshoring.

Changing economic geography and vertical linkages in Japan

In Japan, the manufacturing has become geographically dispersed in the 1990s, when the import share has risen after the historic exchange rate appreciation. As is consistent with the interpretation that import penetration undermines regional input-output linkages, our regressions detect the significant decline of industrial concentrations previously established near output absorbers, especially in industries with high import share growths. This paper also finds that local knowledge spillovers and immobile specialized labor affect regional growth. Thus, while regional demand of tradable outputs matters less, regional supply of inputs, especially non-tradable inputs, remains critical for manufacturing locations.

Offshore Outsourcing Decision and Capital Intensity: Firm-Level Relationships

In offshore sourcing, a firm chooses outsourcing to independent suppliers or in-sourcing from own foreign direct investment (FDI) subsidiaries. Based on the firm-level data on offshore make-or-buy decision covering all manufacturing industries, this paper compares averages, documents inter-firm distributions, and estimates multinomial logit models of the firms sourcing mode choice. As predicted by previous theoretical models, this paper directly confirms at the firm level that outsourcing firms tend to be substantially labor-intensive compared with firms in-sourcing from the same region, even after the firms R&D intensity, firm size, or industry is controlled for.

FACTOR PRICE EQUALIZATION IN JAPANESE REGIONS

This paper tests factor price equalization (FPE) in Japanese regions. I found that FPE is strongly rejected, even when unobserved cross-regional differences in factor quality and productivity are considered. The wage tends to be low in labour-abundant regions specializing in labour-intensive industries. The cross-regional gap in absolute wage levels remains large, while convergence is observed during the 1990s, a period of wage declines that appeared to be related to deep import penetration. This finding of FPE violation is to be expected, given the restricted interregional labour mobility and distinctive difference in specialization patterns across regions in Japan.

Offshore Outsourcing and Non‐Production Workers: Firm‐Level Relationships Disaggregated by Skills and Suppliers

Previous studies have established that offshoring firms employ more non-production workers. By using micro-data on Japanese firms, this paper disaggregates non-production workers. The share of skilled non-production workers tends to be high in offshoring firms but that of unskilled non-production workers is not. The share of non-production workers for the management of overseas activities tends to be high in FDI firms and in firms outsourcing to foreign suppliers, but not in Japanese firms outsourcing to offshore suppliers owned by other Japanese firms. These findings suggest that offshoring has different impacts on employment depending on suppliers and the workers skill.

Foreign outsourcing and the product cycle: evidence from micro data

This article provides empirical evidence on the product cycle and the firms make-or-buy decision by using a firm-level data set with a direct measure of foreign outsourcing. Across industries, foreign outsourcing tends to be inactive in R&D-intensive industries. Within each industry, products exported from the home country are on average significantly more R&D intensive than those outsourced to independent foreign firms. Products manufactured within subsidiaries at South tend to have medium R&D intensity. This ordering in R&D intensity is consistent with the theoretical prediction.

Skew Productivity Distributions and Agglomeration: Evidence from Plant-Level Data

Okubo T. and Tomiura E. Skew productivity distributions and agglomeration: evidence from plant-level data, Regional Studies. This paper empirically examines how the shapes of plant productivity distributions vary across regions based on Japans manufacturing census. It focuses on the skewness to examine the asymmetry by estimating the gamma distribution at the plant level. By linking the estimated shape parameters with economic geography variables, it is found that the productivity distribution tends to be significantly left skewed, especially in cores, regions with diversified industrial compositions, regions with weak market potential and in agglomerated industries. These findings suggest that agglomeration economies are likely to accommodate heterogeneous plants with wide ranges of productivities.

Individual Characteristics, Behavioral Biases, and Trade Policy Preferences: Evidence from a Survey in Japan

Import liberalization is one of the most actively debated issues in trade policy. This paper examines how trade policy preferences are related to individual characteristics based on a survey in Japan. Among 10,000 surveyed individuals, people working in non‐agricultural sectors, those working in managerial occupations, or those above retirement age tend to favor freer imports. This paper also finds that people who are influenced by the status quo bias are likely to oppose import liberalization even after controlling for each individuals various characteristics, suggesting that neither income compensation nor insurance schemes are sufficient for expanding support for free trade.

Task Content of Trade: A Disaggregated Measurement of Japanese Changes

Trade in tasks has been actively examined in recent trade theories, although empirical trade research has a long tradition of measuring the factor content of trade. By linking data on occupations, tasks, labour inputs and international trade, we calculate the “task content of trade” in the case of Japan. Our results show that substantial decreases in the net exports of technical tasks, especially operation tasks, strongly characterize the changes in Japans international trade during the 1995–2005 period.