Import Competition and Manufacturing Employment in Japan

This paper investigates the effects of increased import competition on Japanese manufacturing employment at the four-digit industry level from the mid 1990s to the early 2000s. The estimation results of a labor demand equation indicate that decreases in import prices are closely related to the decline in employment in labor-intensive industries exposed to severe import competition. This suggests that import competition is a key factor in explaining the harsh employment situation observed in the Japanese manufacturing sector since the mid 1990s.