abstract: 'Exploiting heterogeneous variations in labour cost increases due to

  Japan''s 2003 social insurance premium reform as a natural experiment, we

  estimate the impacts of the increased social insurance premiums on

  employment, working hours and payroll costs. Using the

  difference-in-differences method with establishment fixed effects, we

  find that firms reduce the number of employees and increase average

  annual earnings from longer working hours in response to an exogenous

  increase in labour costs without productivity gains. Firms manage to pay

  for this increase in the average wage paid to the remaining workers by

  reducing the number of employees to keep total payroll costs unchanged.

  In contrast, since social insurance premiums are shared equally between

  employees and employers, firms pay the remaining half premiums that they

  are imposed with. Sub-sample analyses show that firms adhering to a

  labour hoarding policy did fire many workers taking advantage of the

  2003 reform. This may indicate that the reform provided a good excuse to

  cut employment in firms that had been forced to comply with a labour

  hoarding policy even in an over-employment situation, which is more

  likely in sectors and countries where dismissals are rigorously

  regulated.'
affiliation: 'Kodama, N (Corresponding Author), Hitotsubashi Univ, Grad Sch Econ,
  2-1 Naka, Kunitachi, Tokyo 1868601, Japan.

  Kodama, N (Corresponding Author), METI, Res Inst Econ Trade \& Ind, Chiyoda Ku,
  11th Floor,1-3-1 Kasumigaseki, Tokyo 1008901, Japan.

  Kodama, Naomi; Yokoyama, Izumi, Hitotsubashi Univ, Grad Sch Econ, 2-1 Naka, Kunitachi,
  Tokyo 1868601, Japan.

  Kodama, Naomi, METI, Res Inst Econ Trade \& Ind, Chiyoda Ku, 11th Floor,1-3-1 Kasumigaseki,
  Tokyo 1008901, Japan.'
author: Kodama, Naomi and Yokoyama, Izumi
author-email: 'kodama.naomi@r.hit-u.ac.jp

  izumi.yokoyama@r.hit-u.ac.jp'
author_list:
- family: Kodama
  given: Naomi
- family: Yokoyama
  given: Izumi
da: '2023-09-28'
doi: 10.1111/obes.12226
eissn: 1468-0084
files: []
issn: 0305-9049
journal: OXFORD BULLETIN OF ECONOMICS AND STATISTICS
keywords-plus: 'PAYROLL TAXES; WAGE; INSTITUTIONS; BONUS; EXPERIENCE; INEQUALITY;

  EMPLOYMENT; INCOME; BEARS; PAY'
language: English
month: OCT
number: '5'
number-of-cited-references: '45'
orcid-numbers: Yokoyama, Izumi/0000-0003-4661-2670
pages: 992-1019
papis_id: 9d5cbbaee5e129c3b2a3ee8d5acb0a19
ref: Kodama2018labourmarket
researcherid-numbers: 'Kodama, Naomi/HNB-9949-2023

  Yokoyama, Izumi/T-8665-2017'
times-cited: '2'
title: 'The Labour Market Effects of Increases in Social Insurance Premium: Evidence
  from Japan'
type: article
unique-id: WOS:000443403200007
usage-count-last-180-days: '2'
usage-count-since-2013: '25'
volume: '80'
web-of-science-categories: 'Economics; Social Sciences, Mathematical Methods; Statistics
  \&

  Probability'
year: '2018'