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February 1989, Vol. 112, No. 2
Labor market changes and adjustments: how do the U.S. and Japan compare?
R. W. Bednarzik and C. R. Shiells
Japan is beginning to experience the same sort of economic restructuring that the United States has faced during the last decade or so. Although manufacturing employment is declining (both in an absolute and relative sense), it still plays a larger role in total employment and output in Japan than in the United States.
Large trade deficits in the aggregate or in specific industries may lead to worker dislocations. The ability of the labor market to respond and adjust to change can be considered a competitive factor. For example, if workers can move quickly from declining industries to growing industries, the economy can be more responsive to international competition. Because much of U.S. trade is in merchandise, not services, the manufacturing industry plays a prominent role in international trade. How, then, does the continued job shift to services affect our ability to lower our trade deficit?
This article analyzes labor market flexibility and adjustment capabilities of Japan and the United States. It examines the job shift to services and trends in wages, productivity, and exchange rates to judge the international competitive position of each country.
This excerpt is from an article published in the February 1989 issue of the Monthly Labor Review. The full text of the article is available in Adobe Acrobat's Portable Document Format (PDF). See How to view a PDF file for more information.
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