Do Overtime Regulations Reduce Overtime Work in Japan?

This study employs causal inference methods such as the difference-in-difference and regression discontinuity design to examine the impact of 2019 Japanese labor law reform on workers’ working overtime hours. The results show that the 2019 policy intervention is effective in reducing long working hours in some industries, particularly manufacturing. However, neither the average overtime hours nor the percentage of employees working overtime decreased significantly after the policy intervention, indicating only limited policy effects. This is due to exceptions that are considerably more relaxed than the principle regulatory content and certain lenient exceptions and deferment of requirements in some industries