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The Impact of Demand Shock on the Employment of Temporary Agency Workers: Evidence from Japan during the Global Financial Crisis

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Authors
Hosono, Kaoru; Takizawa, Miho; Tsuru, Kotaro
Issue Date
2015-07
Publisher
Institute of Economic Research, Seoul National University
Citation
Seoul Journal of Economics, Vol.28 No.3, pp. 265-283
Keywords
Demand shockTemporary agency workerEmployment adjustment
Abstract
This study investigates the effect of a negative demand shock on the composition of worker types at firms and examines the change in the share of temporary agency workers. The 2007-2009 global financial crisis is used as the natural experiment to clearly identify the causal link between the demand encountered by a firm and the composition of its workforce in terms of worker types, as well as to rule out any reverse causation. The decrease in demand experienced by Japanese exporting firms is adopted as the exogenous demand shock. Results indicate that compared with other firms, those with higher export ratio, lower liquid asset ratio, higher share of temporary agency workers, larger increase in the share of temporary agency worker ratio, and lower volatility in their sales prior to the crisis decreased their share of temporary agency workers in response to the demand shock. The quantitative effects of these pre-crisis firm characteristics are all economically significant. These results suggest that temporary agency workers serve as a buffer to demand shocks, and liquid assets work as a substitute for temporary agency workers.
ISSN
1225-0279
Language
English
URI
https://hdl.handle.net/10371/94458
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.28 no.1~4 (2015)
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