Long-term employment in Japan: past and present

Abstract

This paper revisits long-term employment practices in Japan and provides new evidence on their evolution over 1982–2022, extending prior work to cover the most recent decades marked by the Great Recession and the COVID-19 pandemic. Using microdata from the Employment Status Survey, we estimate 10-year job retention rates by gender and educational attainment. Contrary to the widespread view that Japan’s long-term employment system has eroded since the 1990s, we find that job retention rates have remained highly stable over the past four decades. In particular, prime-age workers with at least 5 year of tenure (“core employees”) continue to exhibit consistently high retention rates, even during major economic shocks. Although job stability among young entry-level workers—especially college graduates—has declined significantly, cohort analysis shows that this early-career instability does not persist. Most workers eventually transition into stable, long-term employment relationships as they age. We also find no evidence of a decline in the overall share of core employees, although younger male cohorts exhibit temporary delays in accumulating long tenure. In addition, increases in mandatory retirement ages have contributed to higher job retention among older workers. Overall, our findings point to the resilience of Japan’s long-term employment system and suggest that policy discussions should be grounded in its continued empirical relevance.