Faced with the need to cope with growing unemployment in the past decade, a renewed interest has been aroused among economists in the influence of market concentration on employment fluctuations. Previous studies in the U. S. have produced mixed results: Some suggest that higher concentration leads to stability, while others suggest otherwise Further, there are some others who suggest that there is no relation at all between the two.
This paper purports to examine the relationship in the Japanese context. The relationship is particularly interesting in Japan, because employment practices in major Japanese firms, which emphasize lifelong employment, can be taken to mean that major firms in concentrated industries in particular can and do provide secure employment to their employees.
Based on a sample of 181 4-digit manufacturing industries in Japan, the pattern of employment fluctuations in the 1961-70 period was analysed with the multiple regression technique After allowing for such factors as demand fluctuations, market size, worker characteristics, etc, the influence of market concentration and firm size on employment fluctuations was shown to have been positive, a finding which is contrary to the implication of “Japanese management” hypothesis Also of interest is the magnitude of the regression coefficient on demand fluctuations, which is much smaller than one The result indicates that much of the impact of demand fluctuations was absorbed before it influenced employment Although there are no comparable studies in other countries, we may probably say that regardless of the level of concentration and size of firms, Japanese industries in general promise securer employment than in other economies
Anti-monopoly policy has been based predominantly on the efficiency of resource use Our findings in this paper, however, give support to it from another ground, stability of the economy, which has been relatively ignored
