The Japanese Economy, vol. 35, no. 4, Winter 20089, pp. 64106. 2009 M.E. Sharpe, Inc.

. All rights reserved. ISSN 1097203X / 2009 $9.50 + 0.00. DOI 10.2753/JES1097-203X350403

Ma XinXin

Occupational Career Types of Baby-Boomers and Their Effects on Employment Pattern Selection
Abstract: In this article, individual data from the Survey on the Baby-Boomer Generations Work and Life Vision conducted in October 2006 by the Japan Institute for Labor Policy and Training (JILPT) are used to perform a quantitative analysis on the effects of occupational career type on employment pattern choices among baby-boomers. The main conclusions are: first, an analysis of the effects on employment pattern choice before age sixty shows that

Translation 2009 M.E. Sharpe, inc., from the Japanese original, Dankai no sedai no shokugyou kiayria noltaipu oyobi sono shuugyou keitai no sentakli ni ataeru eikyou. Translated by Stacey Jehlik. Ma Xinxin is a COE Researcher at Keio University, and specializes in labor economics and econometrics. Major recent publications include Nicchu ni okeru danjokan chingin kakusa no sai ni kansuru youin bunseki [Factor Analysis of the Wage Disparity Between Men and Women in Japan and China], Nihon roudou kenkyu zasshi, 2007, no. 560, pp. 96107. The author is grateful for having been a participant in the project Survey on the Baby-Boomer Generations Work and Life Vision, conducted by the Work Environment and Work-Life Balance Department (formerly the Work Environment and Labor Conditions Department) of the Japan Institute for Labor Policy and Training (JILPT) as part of my efforts to prepare this article. The author thanks Professor Atsushi Seiki in the Faculty of Business and Commerce at Keio University, and Professor Atsushi Sato, Senior Researcher Yutaka Asao, and Lead Researcher Kazuya Ogura at Doshisha University for their kind assistance and useful comments. Any errors in the article are the authors.
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specialists have a higher probability than generalists of working in part-time jobs or being self-employed; and second, an analysis of the effects on preferred employment patterns at age sixty-five shows that specialists are more likely than generalists to prefer self-employment. This analysis suggests that to promote the employment of seniors, it will be important to provide occupational retraining to generalists who are in middle age, which includes baby-boomers, and to respond to the occupational needs of specialists with specialized skills by providing a social environment that makes it easier for them to start their own businesses. With the baby-boom generation approaching retirement age, there is a growing magnification of such problems as labor shortages and welfare financing challenges (Seike and Yamada 2004). Several steps are being taken to address these problems: the mandatory retirement age is being raised, the revised Law Concerning the Stabilization of the Employment of Older Persons has been enacted (April 2006), and employers are being required to adopt employment security measures for seniors, such as retirement age extensions and continuing employment systems. With seniors wanting to make use of the skills and experiences they have acquired over the course of their careers, companies facing problems of skill succession need to take advantage of seniors who have both a strong desire to work and a wealth of experience and specialized knowledge and skills. Thus, it is important to conduct empirical studies on what kinds of work is being done by the baby-boomers now entering older age, and on what kinds of work patterns they are hoping to have in the future. Previous research on the labor supply of seniors includes studies on dichotomous empirical analysis (whether or not seniors will withdraw from the labor market),1 but little research has been done on the selection of employment patterns among seniors.2 Such research is important for the following four reasons. First, employment patterns are becoming increasingly diversified in the current Japanese labor market (Japan Institute for Labor Policy and Training [JILPT] 2006). Second, as has been pointed out by Seike and Yamada (1996, 2004) and Oishi (2000), the health of

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seniors has an impact on their employment patterns. This suggests that differences in health will lead to different selections of employment patterns among seniors. Third, because seniors have diverse leisure preferences, even those who have the same economic means (i.e., pensions and labor income) may make different employment pattern selections (Ruhm 1990). Fourth, even among senior citizens, different employment patterns are chosen by people in different age groups (Japan Institute of Labor [JIL] 1995, 1998a). The determining factors in employment pattern selection among baby-boomers include labor income, pensions, and other factors such as their health and household structure, but their occupational career type has also been shown to be a major factor (Chioi 2002; Kim and DeVaney 2005; Seike and Yamada 2004).3 Koike and Inoki (2002) used survey research and interview research on occupational career types to show that in European and American companies, white-collar workers possess a narrow range of occupational skills (or tend to be specialists), while in Japanese companies, white-collar workers tend to have multiple job skill types (or tend to be generalists) due to the worker rotation system.4 With regard to the impact of occupational career type on the employment status of seniors, JIL (1998b) points out that companies are extremely likely to recruit highly skilled workers (specialists) in mid-career, and that highly skilled workers are more likely than less-skilled workers to want to continue working beyond age sixty. Nonetheless, because there has thus far been very little detailed quantitative analysis conducted on occupational career types, it is unclear what kind of impact the occupational career types of the baby-boomers might have on their selection of employment patterns. In this article, I use quantitative analysis to shed light on the following three issues. First, what factors influence the formation of occupational career type? Second, what effect does occupational career type have on wages? And third, what effect does occupational career type have on the selection of employment patterns before age sixty (using data on current employment patterns) and on preferred employment patterns at age sixty-five?

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Prior Research and the Characteristics of This Study Theories Regarding Wages and Employment Decisions According to the theory of human capital (Becker 1964), wages are determined by the marginal labor productivity of employees, and human capital reflects labor productivity. Wages are raised to improve the labor productivity of employees by raising both the general human capital formed through education, and the firm-specific human capital formed through skill development opportunities on the job or through education and training provided in the workplace.5 With regard to decisions about employment and labor hours, the neoclassical theory of labor economics suggests that the workers choice of employment is determined by the reservation wage6 and the market wage. If the market wage rate exceeds the reservation wage rate, the worker will choose employment. Under conditions where the workers leisure time is a superior good, and nonlabor income7 rises, labor hours will decline. In addition, while an increase in the market wage rate will cause an increase in labor hours because of the substitution effect, if leisure time is a superior good, then labor hours will instead fall as a result of the income effect. That is, the selection of labor hours is affected by both the substitution effect and the income effect. According to these theories of agent equilibrium, because the market wage rates and reservation wage rates of individual workers differ, their employment pattern selections will also differ. Likewise, because individual preferences for leisure differ, even people with the same market wage rate may select different labor hours, and thus may select different employment patterns. Based on the theories outlined above, several empirical analyses have been conducted on the selection of employment patterns among seniors. The following section summarizes the results of previous studies on the United States/Europe and Japan. Previous Studies on the Employment Patterns of Seniors and the Position of This Study Among Them Table 1 shows the previous empirical analyses conducted on the employment patterns of seniors in the United States/Europe and

Table 1

Survey of Previous Research and Position of Present Study

Author, Year of publication Estimates wages using Heckmans two-step wage function

Model

Employment-type classification

Allotment of the wages of the unemployed

Target respondents Men and women, 5559

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This study (2007)

Multinomial logit

Higuchi and Yamamoto (2002)

Multinomial logit

Estimates wages using Heckmans wage func- Men, 5569 tion Men, 6064 Men, 6064 Men and women, 5569

Mitani (2001)

Multinomial logit

Yashiro, Oishi, and Futakami (1995) Part-time wages

Multinomial logit

Estimates wages using the OLS wage function Wages in firms with 10-99 employees for men 60-64, by prefecture

Tachibanaki and Shimono

Multinomial logit

Kim (2005)

Multinomial logit

Chioi (2002)

Multinomial logit

Panel data: wages when respondents were employed five years prior Total individual income Uses educational background and years of experience as proxy indicators

Honig (1985)

Multinomial logit

Actual and desired: full-time, part-time, selfemployed, unemployed Actual: full-time, part-time, employment seekers, unemployed Actual: Employee, self-employed, unemployed Actual: full-time, parttime, self-employed, unemployed Actual and desired: full-time, part-time, selfemployed, unemployed Actual: full-time, part-time, unemployed Actual: full-time, part-time, unemployed Actual: full-time, part-time, unemployed

Men and women, 5161 Men and women, 5161 Women, 6267

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Japan, and shows where the present study fits in among them. Honig (1985) studied women age sixty-two to sixty-seven in the United States/Europe, divided employment patterns into full-time, part-time, and not employed categories, and used educational background and years of experience as proxy indicators. She found that family composition factors (marital status, age of children, presence of children, presence of children enrolled in school) have an impact on employment pattern selection, and that the older ones children, and the lack of children or lack of children enrolled in school, the higher the rates of unemployment. Chioi (2002) and Kim and DeVaney (2005) studied the age groups fifty-one to sixty-two and sixty-two to sixty-seven, and divided employment patterns into full-time, part-time, and not employed categories. When controlling for the market wage rate, age, and gender had about the same impact on the probability of selecting full-time or part-time employment. Investment assets, pension income, employment health insurance, and health all had a significant impact on the selection of full-time or part-time employment, and the respondents health status and educational level also had a significant impact on the selection of part-time employment. In Japan, Higuchi and Yamamoto (2002) studied male seniors age fifty-five to sixty-nine, and divided employment patterns into four types: full-time, part-time, employment seekers, and not employed. While the market wage rate had a significant positive impact on full-time and part-time employment probability, various types of pension benefits and household income earned by others in the respondents household had a negative impact on the probability of selecting full-time or part-time employment. Mitani (2001) analyzed male seniors age sixty to sixty-four who were employed at the age of fifty-five, and divided employment patterns into three categories: employed outside, self-employed, and not employed. This study showed that the market wage rate had a significant positive impact on the probability of being employed full-time rather than part-time. Furthermore, good health, being married, and the primary income earner being in the parents generation rather than the childrens generation all increased

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the probability of employment, while larger real public pension benefits lowered the probability of employment. In addition, while higher real job earnings lead to a higher probability of outside employment, they lead to a lower probability of selfemployment. Tachibanaki and Shimono (1994) studied male and female seniors (age fifty-five to sixty-nine), and divided employment patterns into four types: full-time, part-time, self-employed, and not employed. They showed that the pensions most likely to encourage retirement were public pensions and private pensions. They also showed that retirement probability is higher among those in full-time employment than those in other employment patterns, that older respondents tend to have larger savings, and that the larger the incomes of other household members, the higher the probability that the respondent will be not employed. To study the impact of occupational career, they divided these into three types at the age of fifty-five: white-collar, blue-collar, and graycollar, but they concluded that there are no differences in behavior between these three groups. However, there are three limitations that must be noted regarding these previous studies. First, because quantitative analyses have not really focused on the baby-boomer generation, the determining factors in the selection of employment pattern in that generation have not been clearly identified. Second, because there have not been any empirical analyses conducted on occupational career type, it is unclear what kinds of factors have an impact on the formation of occupational career type. Third, the effects of occupational career type are not evident. That is, it has not been made clear what kind of impact occupational career type has on wages, or what kind of impact it has on the selection of particular employment patterns. In this article, I conduct an empirical analysis on the determining factors in the selection of various employment patterns among baby-boomers, including the factor of their occupational career, based on the issues raised by previous studies. The hypotheses

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presented in this article were established to facilitate the investigation of the issues mentioned above. Setting the Hypotheses I established my hypotheses as follows. First, the baby-boomers were employed in large numbers during the high growth period, a period when Japanese manufacturing grew considerably. To pursue economies of scale through mass production, the cultivation and retention of talented personnel became an important issue in corporate human resource management (Inoki 2000; Yashiro 1997, 1999). For this reason, the lifetime employment system was established, and a human resource training system that promoted the formation of generalists, primarily among male white-collar workers, was implemented. Thus, one might predict that among males, the longer their length of service with a company, the higher their probability of being a generalist with firm-specific human capital (Hypothesis 1). Next, because more generalists than specialists tend to be in white-collar management positions, and because the wage system is based on seniority, a generalist is likely to earn higher wages than a specialist, even if both employees have the same level of labor productivity (Hypothesis 2).8 If Hypothesis 2 is supported, then since the wages of generalists are likely to rise in larger increments than the wages of specialists, wages may greatly exceed labor productivity. This will make it difficult to implement continued employment (Association of Employment Development for Citizens, 1994). Thus, it is possible to predict that specialists will have a higher probability than generalists of being hired in a full-time or part-time capacity through continued employment programs before the age of sixty (Hypothesis 3). These hypotheses are summarized below. Hypothesis 1: Even among workers with the same level of labor productivity, the longer the employees length of service with a company, the higher his probability of being a generalist. The probability of becoming a generalist is higher among men than women.9

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Hypothesis 2: Even when labor productivity is equal, wages will be higher among generalists than specialists. Hypothesis 3: The probability of obtaining full-time employment before the age of sixty is higher among specialists than generalists. An examination of preferred employment patterns at the age of sixty-five showed that the higher the preference for leisure time among generalists, the higher the probability of their preference for being not employed.10 On the other hand, if an individual uses his labor income as capital to start a new business or utilizes his management skills or professional contacts, his probability of preferring self-employment increases. Because the specialized skills that specialists possess make it relatively easy for them to either continue their employment with the same company or accept a job with another company, they are more likely to prefer full-time or part-time employment. However, if they are utilizing their specialized skills, the probability that they will prefer self-employment may increase. Thus, it is difficult to clearly predict what impact occupational career type will have on preferred employment patterns at age sixty-five. These questions will be addressed based on the results of my empirical analysis. Analytical Framework Estimation Model The procedures used to conduct the quantitative analysis presented in this article are described below. First, I used a multinomial logit model to analyze the determinants of occupational career type. Next, I calculated the wage function for the effect of occupational career type on wages. Finally, I inserted the wage function value into the structural multinomial logit model, and performed a quantitative analysis of the effect of occupational career type on employment pattern. The following four issues need to be noted with regard to this quantitative analysis. The first is the problem of simultaneous

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determination in the market wage rates and employment pattern selection. To solve this problem, this study uses estimated wage function values rather than actual wage rates. The second issue is the possibility that sample selection bias may exist in the estimation of the wage function. To correct this bias, I have used Heckmans two-step selection model (Heckman 1979). The third issue is the problem of simultaneous determination in the pension system and employment pattern selection. To solve this problem, I employ the method presented by Seike (1993), using the pension system benefit qualification dummy as an explanatory variable. Fourth, there may be a discrimination problem in the structural multinomial logit model.11 To address this, I adopt a strategy of establishing an explanatory variable in the reduced form and structural equations, and add explanatory variables reflecting the family background, work history, and peak professional period to the reduced form wage function explanatory variable in the structural multinomial logit analysis. The equations are shown below. First, Equation (1) shows the multinomial logit analysis formula for occupational career type probability.12 exp( xij jn ) Pr(Yi = n) =
j=0 p

exp( x
m=1 j=0

ij jm )

(1)

j: Pension system dummy, family background dummy, nonhealth dummy, years of experience dummy, years of experience squared, educational background dummy, male dummy, occupation dummy, firm size dummy, industry dummy. In Equation (1), Pr(Yi = n) is the probability that individual i will select occupational career type n, and ij expresses each factor j that has an impact on the formation of the occupational career type of individual i. Value m represents each occupational career type (e.g., generalist, specialist, or other), while n is the one occupational career type selected. I will test Hypothesis 1 using gender and the estimated length of service expressed in j.

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Next, Equation (2) calculates Heckmans two-step wage function. (2) InWi = i + ikik + u1i ih + u2i > 0 u1 ~ N(0, ) u2 ~ N(0,1) corr (u1 u2) = (3)

k: Occupational career type (generalist dummy, specialist dummy, other dummy), years of experience, years of experience squared, educational background dummy, male dummy, job changing experience dummy, occupation dummy, firm size dummy, industry dummy. h: Occupational career type (generalist dummy, specialist dummy, other dummy), years of experience, years of experience squared, educational background dummy, male dummy, job changing experience dummy, nonhealth dummy, pension system dummy, marital status dummy, number of children, number of children enrolled in school dummy, co-residence with parents dummy. In Equation (2), ik indicates each factor k that has an impact on the wage rate of individual i. In Equation (3), ih indicates each factor h that has an impact on the employment decision of individual i. I test Hypothesis 2 using the estimated value of the occupational career type in k. To analyze the impact of occupational career type on employment pattern selection, the estimated value (InW ) of the wage function found using Equations (2)(3) is inserted into the multinomial logit model. Equation (4) shows the calculation for this kind of structured multinomial logit analysis.
exp( xiL Ls + s InWs )
t

Pr(Yi = s) =

exp( xiL Ln + n InWn )

n=1 L=0

h=0 t

(4)

L: Occupational career type (generalist dummy, specialist dummy, other dummy), pension system dummy, savings target

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achievement dummy, cohort dummy, educational background dummy, male dummy, marital status dummy, nonhealth dummy, number of children, number of children enrolled in school, co-residence with parents dummy, family background dummy, unemployment experience dummy, desire to continue working dummy, job changing experience dummy, peak professional period dummy. In Equation (4), Pr(Yi = s) is the ratio at which the individual i selects employment pattern s before the age of sixty (or the probability of the employment pattern being preferred by individual i at the age of sixty-five). iL is each factor other than the wage rate (InW ) that impacts the actual or preferred employment pattern of individual i. L is the estimation coefficient of each factor L when selecting employment pattern s. In W is the estimated value of the wage rate and is the estimation coefficient of the wage rate. I test Hypothesis 3 using the estimated value of the occupational career type in L. Explanation of Data and Variable Creation This article uses individual data from the Survey on the BabyBoomer Generations Work and Life Vision conducted in October 2006 by the Japan Institute for Labor Policy and Training (JILPT). This large-scale survey was conducted based on the standards of the Employment Status Survey among baby-boomers (individuals born between 1947 and 1951).13 The total sample size was 2,722 men and women combined. Table 2 shows the narrative statistics of each variable except those that had missing values. The variables were established as follows. First, to obtain the dependent variable, I took the annual employment income (the median value of each annual income category) and divided it by the corresponding number of hours worked (calculating the annual number of hours worked based on weekly work hours), to find the wage rate per hour. For the variable for the category related to occupational career type, I established three groups based on the occupational career criteria: generalist, specialist, and other.14 I divided the employment patterns before age sixty into four

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Table 2 Descriptive Statistics

Variables Dependent variables Wage rate lnw Occupational career Generalist Specialist Other Employment pattern (current) Full-time Part-time Self-employed Not employed Employment pattern (preferred) Full-time Part-time Self-employed Not employed Explanatory variables Personal attributes Male Married Non-health Age (years) Human capital Years of experience Junior high school High school Vocational school Junior college University and higher Sample size Mean Std. dev. Lowest Highest value value

2,479 2,652 2,652 2,652

7.735 13.7% 39.8% 46.5%

0.571

6.543 0 0 0

9.588 1 1 1

2,511 2,511 2,511 2,511

15.9% 57.9% 21.0% 5.2%

0 0 0 0

1 1 1 1

2,538 2,538 2,538 2,538

31.8% 22.3% 20.6% 25.3%

0 0 0 0

1 1 1 1

2,722 2,700 2,679 2,722 2,491 2,491 2,491 2,491 2,491 2,491

60.5% 89.7% 13.7% 56.977 37.843 9.4% 47.2% 7.0% 3.7% 32.7%

1.439 2.709

0 0 0 55 32 0 0 0 0 0

1 1 1 59 44 1 1 1 1 1

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Variables Pension benefit eligibility

Sample size Mean

Std. dev.

Lowest Highest value value

Public pension Corporate pension Other private pension No pension + no response

2,722 2,722 2,722 2,722 2,697 2,722 2,669 2,671 2,671 2,671 2,722 2,722 1,842 1,842 1,842 1,880 2,218 2,218 2,218 2,664 2,664 2,664

78.1% 11.8% 14.0% 20.8% 3.308 28.1% 29.9% 44.4% 49.2% 6.4% 91.7% 35.7% 39.7% 30.2% 30.1% 20.0% 1.2% 38.4% 60.4% 42.1% 47.2% 10.7% 1.615

0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

1 1 1 1 9 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1

Family composition No. of children Have children enrolled in school Co-residence with parents Family Self-employed background family Employee family Other Employment Desire to continue status working Unemployment experience Firm size 199 employees 100999 employees 1,000+ employees Presence of a union Labor union Industry Primary industry Secondary industry Tertiary industry Region Large city Suburb Rural town or village

Source: Survey on the Baby-Boomer Generations Work and Life Vision (JILPT) (2006).

Note: The sample sizes reflect the first sample size for the first of each variable in

Table 2. Because the variables used in each quantitative analysis differ, the sample sizes may differ slightly.

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groups based on the question items related to employment status and labor hours: full-time, part-time, self-employed, and not employed. Employees who worked less than thirty-five hours per week were categorized as part-time, while those who worked thirty-five hours or more were categorized as full-time. With regard to the preferred employment pattern at age sixty-five, respondents were grouped into four categories (full-time, part-time, self-employed, and not employed) based on their preferred employment pattern at the age of sixty-five, as indicated in their responses to the question What kind of work or social activities would you like to be doing each year after the age of sixty? The explanatory variables were established as follows. Various factors have an impact on wages and the selection of employment pattern, but in this study, I established explanatory variables by dividing these into primarily supply-side factors (income, human capital, occupational career, family background, family composition, individual attributes, and employment history) and primarily demand-side factors (firm size, industry). I established three dummy variables to reflect the occupational career type factors: generalist, specialist, and other. The dummy variable for the generalist category was set at 1 when the response to the question Which of the following types best describes you right now? was 1. I am a generalist with skills that can be used in a variety of fields and 0 for other responses. The dummy variable for the specialist category was set at 1 when the response to the question was 2. I am a specialist with skills that are especially useful in a particular field or 3. I am a skilled laborer who works alone in a field that involves making goods and 0 for other responses. The dummy variable for the other category was set at 1 when the response to the question was 4. Neither and 0 for all other responses. The income factor was divided into three components: market wage, pension system, and savings. The market wage was calculated using the wage function. Because the correlation between savings and labor income is high, entering both at the same time could create a multicollinearity problem. Thus, a savings target achievement dummy was used as a proxy for savings.15 Responses regarding the

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pension system were divided into six groups, and dummy variables were established for each: No pension, Eligible to receive a welfare pension, Eligible to receive a mutual-aid pension, Eligible to receive a national pension, Eligible to receive a corporate pension, and Eligible to receive some other private pension. With regard to human capital, the number of years of experience was calculated as age no. of years of education 6. Five dummy variables for educational background were established, representing junior high school, high school, vocational school, junior college, and university. Responses related to occupation were divided into ten types, and a dummy variable was established for each: specialized or technical work, management work, administrative work, sales work, service work, security work, transportation and communications work, skilled labor or production process work, unskilled labor, and other. Six dummy variables for the family background factors were used: family of a salaryman working in a company, factory, or office, family of a company president or executive, family engaged in farming, forestry, or fisheries, a self-employed family operating a commercial business or factory, family of a specialized freelance professional, such as a lawyer, accountant, tax accountant, or doctor, and other. In the multinomial logit analysis related to employment pattern, the responses family of a salaryman working in a company, factory, or office and family of a company president or executive were integrated into the dummy for employee family, while the responses family engaged in farming, forestry, or fisheries, a self-employed family operating a commercial business or factory, family of a specialized freelance professional, such as a lawyer, accountant, tax accountant, or doctor, and other were integrated into a dummy for self-employed family. Within the personal attributes, the gender dummy was set as male = 1 and female = 0. The poor health dummy was based on the response to the instruction Please rate your ordinary health status on a scale of 1 to 5. Those who selected (1) poor and (2) somewhat poor = 1, while those who indicated other responses = 0. For the marital status dummy variable, married = 1, unmarried = 0.

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For the family composition factors, the dummy expressing the presence of children enrolled in school dummy is as follows: Have children enrolled in elementary, junior high, high school, or higher = 1, other = 0. Co-residence with parents: Parents live in same residence = 1; parents do not live in same residence = 0. The number of children is calculated by adding the number of male children and the number of female children. With regard to the employment history factor, the dummy for unemployment experience is set at 1 when the respondent has experience being unemployed and 0 when the respondent does not have experience being unemployed. The dummy representing the desire to continue working is based on the response to the question Until what age would you like to continue doing work that earns an income? Dummy values were set at 1 for responses of sixty and older and 0 for no response. The value of the dummy for job changing experience was based on the answer to the question: Have you ever changed jobs in the past? yes = 1, no = 0. To identify the respondents peak professional period, the survey asked What was the peak period in your professional working life? Responses were split into five categories, twenties, thirties, forties, fifties, and never, and dummy variables were established for each. For the supply-side factors, the firm size responses were divided into three categories: small (199 employees), medium (100999 employees), and large (1,000+ employees). Industries were likewise divided into three categories: primary, secondary, and tertiary industries.16 To control for macroeconomic factors, regions were divided into three categories, large cities, suburbs, and rural towns and villages, and dummy variables were established for each. Occupational Career Types and Employment Status as Indicated by the Data Wage Distribution by Occupational Career Type Figures 1, 2, and 3 all show the wage rate distributions by occupational career type. These figures show that the wage distributions for all

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Figure 1. Wage Rate Distribution (all respondents)

10 9 8 7 6 5 4 3 2 1 0
6 7 8 9 10

Percent

Total lnW

Source: Survey on the Baby-Boomer Generations Work and Life Vision (JILPT) (2006). Figure 2. Wage Rate Distribution (Specialists)
10 8 Percent 6 4 2 0 6 7 8 9 Specialist lnW 10

Source: Survey on the Baby-Boomer Generations Work and Life Vision (JILPT) (2006).

respondents and for specialists are fairly normal distributions. They also show that the proportion of generalist wages in regions with high wage rates is higher than that for both specialists and all respondents combined. The wage distributions differ by occupational career type.

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Employment Pattern by Occupational Career Type Figure 4 shows the respondents employment patterns before the age of sixty by occupational career type. Overall, the highest percentage of respondents were engaged in full-time employment. Generalists had the highest proportion of respondents in full-time employment, at 67.4 percent, while the specialists had the highest proportion of self-employed respondents. This shows that employment patterns before age sixty differ by occupational career type. The employment patterns preferred by respondents at the age of sixty-five, by occupational career type, are shown in Figure 5. Overall, about 30 percent of respondents in each occupational career type prefer part-time work. The proportion of respondents preferring self-employment was highest among specialists, at 24.8 percent. This shows that preferred employment patterns at age sixty-five differ by occupational career type. Preferred Employment Pattern at Age Sixty-five by Occupational Career Type Before Age Sixty Table 3 shows the preferred employment patterns at age sixty-five by employment pattern before age sixty. The preferred employment pattern at age sixty-five was the same as the respondents employment pattern before age sixty for 45.9 percent of full-time employees, 43.6 percent of part-time employees, 63.7 percent of the self-employed, and 40.2 percent of the not employed.17 The employment pattern before age sixty strongly affects the preferred employment pattern at age sixty-five, and this influence is strongest among the self-employed. The results of this cross-tabulation show that occupational career type has an impact on wage distribution employment pattern selection before age sixty, and preferred employment pattern at age sixty-five, but they do not specifically show a causal relationship. To address this problem, I conducted the following quantitative analysis. The results are explained below.

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Figure 3. Wage Rate Distribution (Generalists)

15

Percent

10

0 6 7 8 Generalist lnW 9 10

Source: Compiled from individual data from the Survey on the Baby-Boomer Generations Work and Life Vision (JILPT) (2006).

Figure 4. Employment Pattern Before the Age of 60 by Occupational Career Type

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%

4.9% 16.9% 10.8%

3.6% 23.6% 11.1%

6.9% 20.5% 21.9% Not employed Selfemployed Part-time

67.4%

61.7%

50.7%

Full-time

Generalist

Specialist

Other

Source: Survey on the Baby-Boomer Generations Work and Life Vision (JILPT) (2006).

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Figure 5. Preferred Employment Pattern at Age Sixty-five by Occupational Career Type

100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 18.1% Generalist 19.6% Specialist 26.0% 36.1% 33.6% 14.3% 24.8% 18.9% Self-employed 31.5% 21.9% 26.3% Not employed

28.8%

Part-time

Full-time

Other

Source: Survey on the Baby-Boomer Generations Work and Life Vision (JILPT) (2006).

Results Analysis of Determinants in the Formation of Occupational Career Type Table 4 shows the results of my analysis of the determinants of occupational career type. After controlling for the human capital factors of educational background and length of service, the results show that a length of service of four years or longer has an overall positive work continuation effect. Also, over the long term, the longer ones length of service, the higher the probability that one is a generalist. Results regarding gender show that men have a higher probability than women of being generalists. These results support Hypothesis 1, that Even among workers with the same level of labor productivity, the longer the employees length of service with a company, the higher his probability of being a generalist. The probability of becoming a generalist is higher among men than women.

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Table 3 Preferred Employment Pattern at Age Sixty-five by Employment Pattern Before Age Sixty
Age 60/ Age 65 Number % Part-Time Number % Self-employed Number % Part-time Number % Self-employed Number % Not employed Number % Total Number % Full-time SelfNot Full-time Part-time employed employed 629 46.9 82 22.2 66 11.2 82 22.2 66 11.2 18 16.1 785 33.4 306 22.3 161 43.6 33 6.6 161 43.6 33 6.6 37 33.0 537 22.8 90 6.6 18 4.9 319 63.7 18 4.9 319 63.7 12 10.7 439 18.7 346 26.2 108 29.3 93 18.5 108 29.3 93 18.6 45 40.2 592 26.1

Total 1,371 100 369 100 601 100 369 100 501 100 112 100 2,353 100

Source: Survey on the Baby-Boomer Generations Work and Life Vision, JILPT 2006.

The results regarding occupation show that specialists or engineers have a higher probability of being specialists than people in other occupations. The results related to industry show a tendency for individuals in tertiary industries to be less likely than people in primary and secondary industries to be specialists. The survey data indicate that the proportion of respondents in secondary industries (38.4 percent) is considerably higher than that in primary industries (1.2 percent), and these analytical results therefore suggest that the development of secondary industries during Japans high economic growth period is linked to the formation of generalist and specialist job types. That is, starting in the 1960s, in conjunction with changes in the industrial structure, which had been focused on creating

Table 4

Analysis of the Determinants of Occupational Career Type (multinomial logistic regression model)
Generalist vs. other Coefficient z-value Coefficient Specialist vs. other z-value

86 THE JAPANESE ECONOMY

Pension system 1.79 2.00 0.76 2.05 0.08 0.211 0.0441165 0.1431744 0.1626566 0.112

0.94 0.17 0.81 0.78 0.57

0.59 0.14 1.69 0.33

0.311 0.249 2.229* 0.259

1.59 1.34 1.97 0.76

(no pension) Public pension 0.588+ Mutual aid pension 0.680** National pension 0.1885703** Corporate pension 0.509* Other private pension 0.020 Family background (salaryman + company president + directors) Self-employed family in farming, forestry, or fisheries industry 0.1771382 Self-employed family with a factory or commercial business 0.034 Self-employed family of a lawyer or doctor 2.091+ Other and no response 0.148

Health status Human capital

0.2961185** 0.0765805* 0.002* 0.4371587 0.435 0.262 0.393 0.848** 0.076 0.8103847* 0.5142969 0.4444413 2.161764* 2.447405** 1.276697* 1.939978** -0.6742173 0.27 2.32 1.42 1.08 1.98 3.08 2.30 2.48 1.17 1.322326** 1.704863** 1.25442** 0.9754646** 1.811413** 1.935192** 0.8445183** 2.160351** 1.844975** 5.56 6.57 4.67 3.39 3.45 5.06 2.84 5.07 4.04 0.94 0.76 0.41 0.79 2.73 0.032903 0.124 0.3685999 0.363 0.930** 0.12 0.33 0.75 1.19 4.53

2.87 2.33 2.25

0.0380978 0.0346633 0.001

0.49 1.49 1.71

Sex Occupation

Poor health Years of experience Years of experience squared (Junior high school) High school Vocational school Junior college University Male (Specialist, technician) Management Administration Sales Service Security Transportation and communication Skilled labor, production processing Unskilled labor Other
WINTER 20089 87

(continued)

Table 4 (continued)

Generalist vs. other Coefficient 0.001 0.290 0.3982738+ 0.2209748 1,177 1,011.84 0.0000 0.159 1.75 0.31 0.00 1.14 0.2373985 0.142 0.4832157** 0.741** z-value Coefficient

Specialist vs. other z-value 1.32 0.74 2.74 1.51

88 THE JAPANESE ECONOMY

Firm size

Industry

(Small enterprise) Medium-size firm Large firm (Primary, Secondary) Tertiary

Constant No. of obs. Log likelihood Prob > 2 Pseudo R2

Source: Estimated based on Survey on the Baby-Boomer Generations Work and Life Vision, JILPT 2006. Notes: Significance levels: + 10 percent; * 5 percent, and ** 1 percent. Estimates were calculated using the multinomial logit model. The reference category is Other. In the analysis, the reference categories were No pension, Salaryman + company president + directors, Junior high school, Small and Primary, secondary. The respondents region was also included, but the coefficients are not reported here.

WINTER 20089

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goods, and the development of the manufacturing industry, Japanese companies began to adopt unique, internal personnel training systems (Inoki 2000). Results related to the pension system show that eligibility to receive a mutual-aid pension or corporate pension leads to a higher probability of being a generalist. Those who work for large companies or government agencies are also more likely to be generalists. With regard to the family background, respondents from selfemployed or specialist families have a higher probability of being specialists. Analytical Results of the Effect of Occupational Career Type on Wages Table 5 shows the results of my analysis of the effect of occupational career type on wages. The analytical results produced using Heckmans two-step model for the wage function appear to be quite similar to the OLS results. Thus, I will explain below only the results produced using Heckmans model. An examination of the factors in occupational career type show that the figure for specialists is 0.112, and has a level of statistical significance of less than 1 percent. When controlling for factors of human capital, the wages of specialists are 11.2 percent lower than the wages of generalists. These findings are consistent with the findings shown in the wage rate distribution diagrams, and support Hypothesis 2, which states that Even when labor productivity is equal, wages will be higher among generalists than specialists. The results show that longer lengths of service and higher levels of education predict higher wages. This is consistent with the theory of human capital. They also show that men have higher wages than women, and that wages are higher for those working in larger companies. These findings are consistent with the previous research (Higuchi 1991; Ma 2007b; Ono 1989). The results further indicate that the wages of union members are higher than those of nonunion members, and that the wages of managers are higher than those of specialists or engineers.

Table 5

Analysis of the Effect of Occupational Career Type on Wages (Heckman two-step selection model)
Second stage estimates Coefficient 0.262** 0.014** 0.000 0.092* 0.155** 0.288** 0.11795** 0.1499449** 0.026807 0.114** 0.0740218+ 3.37 4.34 0.86 3.27 1.87 2.97 6.19 2.25 0.4660219* 0.5060038* 0.3370748 0.0330706 0.1269896 0.216* 8.11 3.91 0.77 0.009** 0.715 0.0096347 z-value Coefficient First stage estimates z-value 0.07 1.37 1.40 2.15 1.93 1.16 0.22 0.86 2.10

90 THE JAPANESE ECONOMY

Sex Human capital

Male Years of experience Years of experience squared (Junior high school) High school Vocational school / junior college University

Occupational career (generalist) Specialist Other Job changing Job changing experience Career by industry (Specialist, technician) Management Administration

0.1152711** 0.1540444** 0.3313513** 0.157376 0.1997564** 0.1219761* 0.007 0.062* 0.174** 0.016 0.053+ 0.61 1.67 0.1131 0.116 0.945** 0.6059538** 0.186 0.0674343 0.0529795 0.12 0.00 5.27 5.96 1.37 0.57 1.12 (continued) 2.23 5.75 4.25 2.00 0.10 2.49

Sales Service Security Transportation and communications Skilled labor, production processing Unskilled labor Other Firm size (Small firm) Medium-size firm Large firm Industry (Primary, Secondary) Tertiary Union Union Pension system (No pension) Public pension Mutual aid pension National pension Corporate pension Other private pension Health status Poor health Family composition Married
WINTER 20089 91

2.84 3.40 3.71

Table 5 (continued)
Second stage estimates Coefficient 0.245 0.026 0.1243362 0.0497846 0.85 1.07 0.50 1.51 z-value Coefficient z-value First stage estimates

92 THE JAPANESE ECONOMY

No. of children Have children enrolled in school Co-residence with parents 7.359** 0.0565* 1,352 213 1,139 0.000 102.07 0.80

Constant Number of obs. Censor obs. Uncensor obs. Prob. 2

Source: Estimated based on Survey on the Baby-Boomer Generations Work and Life Vision, JILPT 2006. Japan Institute for Labor Policy and Training. 2006. Tayouna hatarakikata o meguru ronten bunseki houkokusho [Analytical Report on the Debates Regarding Various Work Patterns], Labor Policy Research Report no. 70. Notes: Significance levels: + 10 percent; * 5 percent, and ** 1 percent. Estimates were calculated using the multinomial logit model. In the analysis, the reference categories were Junior high school, Generalist, Specialist, engineer, Small, and No pension. The respondents region was also included, but the coefficients are not reported here.

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The Effect of Occupational Career Type on Employment Pattern Table 6 shows the results of my analysis of the effect of occupational career type on employment patterns before age sixty. The probability of being a part-time worker is higher for specialists than for generalists. Also, the probability of being selfemployed is higher among specialists than generalists. However, there was no significant difference between generalists and specialists in terms of their probability of being full-time workers. This partially supports Hypothesis 3. With regard to the pension system, eligibility to receive a public pension or mutual-aid pension leads to a higher probability of having full-time employment. However, eligibility to receive a national pension reduces the probability that one is a full-time employee. Also, eligibility to receive a mutual aid pension or corporate pension reduces the probability of being self-employed. The selection of employment pattern was shown to differ depending on ones pension type. With regard to other factors, older respondents had a higher probability of being self-employed. The probability of being a full-time employee or self-employed was higher among men than women, but women were more likely than men to engage in part-time work. Experience being unemployed reduced the respondents probability of being a full-time employee. The higher the respondents desire to continue working, the greater his likelihood of being employed full-time or self-employed. Also, those who reported experiencing their peak professional period in their twenties had a higher probability of being employed full-time or self-employed, while those who reported experiencing their peak professional period in their thirties or forties had a higher probability of being employed part-time. Table 7 shows the estimates of the effect of occupational career type on preferred employment pattern at age sixty-five. While specialists are more likely than generalists to prefer self-employment, there was no significant difference between generalists and specialists in their probabilities of preferring full-time or part-time work.

Table 6

The Effect of Occupational Career Type on Employment Selection Before Age Sixty (multinomial logistic regression model)

Full-time vs. not employed Coefficient 2.425 0.11 12.174 0.52 24.600 z-value Coefficient Coefficient z-value

Part-time vs. not employed

Self-employed vs. not employed z-value 1.07

94 THE JAPANESE ECONOMY

Market wages

Occupational career 0.629 0.437 1.708** 1.299** 1.458772** 0.154 0.116 0.6206468 0.317 0.55 1.27 0.37 0.34 0.037 0.099 0.5391381 0.905 5.61 2.65 5.06 0.511+ 0.321 0.5735402+ 1.64 0.58 1.84 0.08 0.28 0.96 1.40 1.54 1.09 0.992* 0.959* 2.07 2.06

Wage rate (estimated) (Generalist)

0.710+ 0.545 0.4133315 2.39173** 0.356 1.262213** 0.345 0.3933865 1.366*

1.62 1.25 1.37 3.72 1.14 2.55 0.97 0.71 2.24

Pension system

Specialist Other (No pension) Public pension Mutual aid pension National pension

Savings

Cohort

Corporate pension Other private pension Achievement of savings goals (Born in 1951) 1947

0.0084274 0.102 0.200 0.8117888 0.8947956 1.981155 1.089** 0.5725743 0.0372692 0.210 0.106 0.1475783 1.23 0.54 0.172+ 0.0777231 1.85 0.26 1.4 0.28 0.60 0.263 0.000 0.011 0.60 0.00 0.03 0.0950571 0.0969456 0.449 0.086 0.146 0.19 0.14 3.32 2.812882 8.061483 1.041966** 0.53 0.53 2.83 4.472664 14.98134 1.118** 0.22 2.414141 0.60 3.368542 0.86 0.87 1.01 3.23 0.22 0.69 1.23 0.94 0.51

0.02 0.26 0.50

0.545 0.385 0.491

1.08 0.88 1.14

0.774+ 0.707+ 0.569

1.62 1.65 1.34

Education

Personal attributes

1948 1949 1950 (Junior high school) High school Vocational school / junior college University Male

Family composition

Family background 0.024 0.3166175 0.6571501* 0.09 0.63 2.34 0.1034176 0.3269459 0.0285174

Married Poor health Have children enrolled in school No. of children Co-residence with parents Employee family 0.36 0.62 0.10

WINTER 20089

Employment history

Self-employed family Other Experience being unemployed

0.437 0.6221083 0.1792927

1.56 1.11 0.60

95

(continued)

Table 6 (continued)
Full-time vs. not employed Coefficient 2.67 0.11 0.211 0.58 0.4651151 1.156 2.73 1.835** 3.75 1.35 z-value Coefficient Coefficient z-value z-value Part-time vs. not employed Self-employed vs. not employed

96 THE JAPANESE ECONOMY

Desire to continue 1.003** working Experience changing 0.038 jobs Peak employment None period 20s 1.725866* 30s 1.408149+ 40s 1.12136 50s 0.158 Constant 15.55071 Obs. 1,741 Log likelihood 1,315.92 0.000 Prob > 2 0.283 Pseudo R2 2.19 1.76 1.38 0.15 0.10 2.03475+ 1.842481* 2.075565* 0.900613 89.54052 2.57 2.27 2.51 0.83 0.51 2.498709** 1.779264* 2.001694* 0.3413944 182.8515

3.13 2.20 2.42 0.32 1.06

Source: Estimated based on Survey on the Baby-Boomer Generations Work and Life Vision, JILPT 2006. Notes: Significance levels: + 10 percent; * 5 percent, and ** 1 percent. Estimates were calculated using the multinomial logit model. The reference category was Not employed. In the analysis, the reference categories were Generalist, No pension, Born in 1951, Junior high school, Employee family, None [peak professional period]. The respondents region was also included, but the coefficients are not reported here.

WINTER 20089

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Eligibility to receive a national pension was shown to reduce the probability of preferring full-time employment. Eligibility to receive some other type of private pension was shown to reduce the probability of preferring part-time employment. Also, eligibility to receive a public pension, mutual aid pension, or corporate pension reduces the probability of preferring self-employment across the board. Pension benefit eligibility was shown to reduce the probability of preferring employment to nonemployment at age sixty-five. The probability of preferring full-time or self-employment was higher among men than women, and the desire to work beyond the age of sixty-five was stronger among men than women. Those who come from self-employed families are more likely than those who come from families of employees to prefer self-employment. A stronger desire to continue working led to a higher probability of preferring all employment patterns, full-time, part-time, or self-employment, and this impact was most evident for full-time employment. The factors that did not have a significant impact on preferred employment type at age sixty-five were the wage rate, savings orientation, birth cohort, educational background, family composition, and peak professional period. Summary and Future Challenges In this article, I conducted a quantitative analysis of such issues as the effect of occupational career type on the employment patterns selected by baby-boomers. My major conclusions are as follows. First, specialists around the age of sixty have a higher probability than generalists of actually being employed and being employed in their preferred employment pattern. This is because the favorable treatment that generalists receive under the seniority-based wage system make it easy for discrepancies to emerge between an employees level of contribution and their wages, and this in turn makes it difficult for companies to continue the employment of middle-aged and older-middle-aged workers (Association of Employment Development for Citizens 1994). Also, because generalist

Table 7

The Effect of Occupational Career Type on Preferred Employment Pattern at Age Sixty-five (mutinomial logistic regression model)
Full-time vs. not employed Coefficient 3.915 0.34 4.385021 0.35 3.912212 z-value Coefficient Coefficient z-value Part-time vs. not employed Self-employed vs. not employed z-value 0.29

98 THE JAPANESE ECONOMY

Market wages

Wage rate (estimated)

Occupational career 0.234 0.336+ 1.18 1.61 0.162 0.211 0.74 0.93

(Generalist) 0.591* 0.418 2.35 1.58

Pension system

Savings

0.529 0.065 0.3587152* 0.2694219 0.118223 0.8307026**

2.81 0.28 2.25 1.40 0.66 2.83

0.276 0.592 0.229 0.018 0.3843351* 0.2612586

1.49 2.49 1.41 0.08 2.03 0.92

0.7806432** 1.525932** 0.913** 0.7209943** 0.2009732 0.5104225

4.22 4.65 5.09 2.70 0.97 1.5

Cohort 0.263 0.0702683 1.00 0.30

Specialist Other (No pension) Public pension Mutual aid pension National pension Corporate pension Other private pension Achievement of savings goals (Born in 1951) 1947 1948 0.118 0.008 0.39 0.03

0.059 0.053

0.19 0.20

0.088 0.0797839 1.809198 2.108768 3.837241 1.452** 0.3490669 0.0275115 0.243 0.001 0.0781916 0.52 0.0888635 0.56 1.44 0.03 0.2585741 0.029 1.37 0.56 0.100 0.045 0.012 1.44 0.38 0.015034 0.073 0.06 0.96 0.0812749 0.055 0.83 0.53 7.37 0.059 1.516 0.187 0.02 0.19 0.95 0.726 2.096 1.215** 0.25 0.25 5.64 0.29 0.67 0.51 0.82 0.07 0.93 0.0829511 0.04 0.333 0.15

0.41 0.38

0.108 0.0884336

0.47 0.39

0.183 0.050

0.74 0.21

Education

Personal attributes

1949 1950 (Junior high school) High school Vocational school / junior college University Male

Family composition

Family background 0.137 0.283 0.083 2.012** 5.71 0.51 0.0782388 1.682** 0.96 0.85 0.1418694 0.201

Married Poor health Have children enrolled in school No. of children Co-residence with parents Employee family 0.94 0.59 0.47 4.95 0.337* 0.281 0.193 1.355**

2.08 0.75 1.05 3.76

WINTER 20089

Employment history

Self-employed family Other Experience being unemployed Desire to continue working

99

(continued)

Table 7 (continued)
Full-time vs. not employed Coefficient 0.330* 2.03 0.204 1.180 0.0389182 0.21 z-value Coefficient Coefficient z-value z-value Part-time vs. not employed Self-employed vs. not employed

100 THE JAPANESE ECONOMY

Experience changing jobs Peak employment None period 20s 30s 40s 0.0916826 0.064 0.0721162 0.2501417 0.36 31.084 0.34 0.76 0.5095898 1.47 26.965 0.31 0.23 0.25 0.0394552 0.135 0.1823974 0.13 0.46 0.61 0.4997924+ 0.0980566 0.4475596 0.5971788+

1.64 0.33 1.47 1.67 0.27

50s

Constant Obs Log likelihood Prob > 2 Pseudo R 2

30.91211** 1,761.000 2,142.46 0.000 0.113

Source: Estimated based on Survey on the Baby-Boomer Generations Work and Life Vision, JILPT 2006. Notes: Significance levels: + 10 percent; * 5 percent, and ** 1 percent. Estimates were calculated using the multinomial logit model. The reference category was Not employed. In the analysis, the reference categories were Generalist, No pension, Born in 1951, Junior high school, Employee family, None [peak professional period]. The respondents region was also included, but the coefficients are not reported here.

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employees have firm-specific human capital that cannot be used when they change jobs, they are less likely to become reemployed at another company after leaving their workplace. The continued employment and reemployment of generalists who want to keep working is going to be an important challenge that will have to be addressed in the future. To promote the employment of senior citizens, education and training will have to be provided for middle-aged and senior generalists, including the baby-boomers. It will also be important for companies to adapt to the continued employment of seniors by revising their old seniority-based wage systems. They are going to have to start transitioning to a performance-based wage system in which wages reflect the workers level of contribution to the company (Ebisuno 2002; Yashiro 1999). Second, there is a high probability that specialists will prefer selfemployment at age sixty-five. In this group, many people currently working as employees are thinking about making the transition to self-employment. It will be particularly important that efforts be made to create a social environment where it is easy for workers with specialized skills to start their own businesses. Third, the proportions of people wanting to be engaged in fulltime, part-time, and self-employment at age sixty-five are about equal, and the share of people who hope to be engaged in part-time employment at age sixty-five is much higher than the share of workers actually working in part-time jobs before age sixty. The employment needs of baby-boomers are clearly quite diverse. Thus, to create a society where lifelong service is the norm, it will be important for society to create diverse employment opportunities that meet the varied employment needs of seniors. Companies need to begin investigating the introduction of new work shift options (such as shortened workweek systems and flexible employment systems) for older employees (Seike 1992). Finally, the analysis in this study clarified several facts related to the determinants of occupational career type, and the effects of occupational career type on wages, employment pattern selection at age sixty, and preferred employment patterns at age sixty-five, but several issues still remain to be addressed. First, because this

102 THE JAPANESE ECONOMY

study relied on individuals self-reporting their own occupational careers, future analyses should add an objective index of occupational career type. Second, because this was a cross-sectional analysis, issues still remain in terms of the differences between individuals. In the future, panel data analyses should be conducted to address these issues. And third, the analysis in this article was a quantitative analysis of the diverse employment pattern selections made by full-time workers, part-time workers, self-employed people, and the not employed, but it does not include any analysis of the effects of liquidity constraint factors on self-employment.18 A rigorous empirical analysis of self-employment will surely need to be conducted in the future. Notes
1. For more on the dichotomous empirical analysis on the employment of seniors, see Oishi (2000), Seike (1993), Seike and Yamada (1996, 2004). 2. In this article, employment patterns will be divided into four types: parttime, full-time, self-employed, and not employed. 3. Chioi (2002) and Kim and DeVaney (2005) showed that the factors of income, pension, health, and household composition have an impact on the employment patterns of seniors. Seike and Yamada (2004) divided employed workers into company people and work people based on their occupational history, and showed that the continuing employment status of these two groups differs because of differences in their accumulation of human capital. 4. The Nippon Keidanren ([Nikkeiren] 1995) categorizes occupational career types as follows, based on the new era of Japanese-style management. Workers are classified as (1) lifetime-employed elite executives (generalists), (2) specialized workers who move freely between companies (specialists), and (3) ordinary workers who work based on their own individual needs (other). In light of the Keidanrens classification system and the individual data, this article uses three occupational career types, generalist, specialist, and other. 5. According to a study by Mincer (1974), in quantitative analyses of human capital, the level of education is used as a proxy for general human capital, while the number of years of experience is used as a proxy for firm-specific human capital. 6. In the analysis below, explanatory variables such as marital status, number of children, the presence of co-resident children and co-residence with parents are used as indicators of the reservation wage. 7. In this article, pension income is used as a proxy for nonlabor income. 8. In this quantitative analysis, human capital (education level, years of service, or years of experience) is used as a proxy for labor productivity. 9. In quantitative analysis, because human capital (education level, length

WINTER 20089

103

of service, years of experience) is an indicator that reflects labor productivity, if we were to control for these human capital variables, the condition of equal labor productivity would be met. 10. My reasons for selecting the age of sixty-five are as follows. First, in this survey, respondents were asked about the employment they prefer at each age after the age of sixty, in one-year increments, but the response rate was highest among sixty-five-year-olds. Also, according to the revised Law Concerning the Stabilization of the Employment of Older Persons, business owners are now being required to raise the mandatory age to sixty-five and to introduce employment continuation systems. Further, pension system reforms will gradually raise the age at which pensions are payable from sixty to sixty-five. For these reasons, it seems that the employment status of seniors is likely to change significantly at the age of sixty-five. I therefore chose to use sixty-five as the age for analyzing preferred employment patterns in this study. 11. The discrimination rule is as follows: If the condition K J > = H 1 is fulfilled, then the structural equation process is overidentified. In this formula, K is the total number of exogenous variables in the model, J is the number of exogenous variables in the structural equation, and H is the number of endogenous variables in the structural equation. 12. For details about the multinomial logit model, see Green (2003). 13. This generally refers to people born in 1947 to 1951, but is a five-year age cohort. 14. For more information on the specific standards for establishing these categories, see the section on Occupational Career Factors in the explanatory variables. However, while occupational career type as an explanatory variable was established as a series of dummy variables, occupational career type as a dependent variable is a category variable. 15. While savings might be seen as a proxy for nonlabor income, the survey data show that the correlation between savings and labor income is high at 0.8997. Thus, in this analysis of employment patterns, I will not use the amount of savings and will use savings target achievement instead as an indicator of savings orientation. 16. There were three dummy variables for industry, based on survey responses. Responses indicating a primary industry (farming, forestry, and fisheries, or mining) = 1, other = 0. Responses indicating a secondary industry (construction, manufacturing, public utility industries like electricity and gas, transportation, telecommunications) = 1, other = 0. Responses indicating a tertiary industry (wholesaling, retailing, finance and insurance, real estate, eating and drinking establishments, inns and hotels, labor agency services, business service contractors, services for offices other than business service contractors, services for individuals, hospitals, schools, and other public service industries, public service for national, prefectural, or municipal governments) = 1, other = 0. 17. See Ma (2007a) and the Japan Institute for Labor Policy and Training (2007) for the results of a crosstabulation of the selected employment pattern before age sixty with pension income, family background, gender, and peak professional period, and a crosstabulation of preferred employment pattern at the age of sixty-five with those same factors. Those results are omitted here due to space limitations.

104 THE JAPANESE ECONOMY

18. Blanchflower and Oswald (1998), Coate and Tennyson (1992), and Stiglitz and Weiss (1981) have argued that liquidity constraints (e.g., of capital, property, liquid assets, home ownership, and past income) have a significant impact on self-employment, but this analysis did not address the effects of the various liquidity constraint factors on self-employment probability.

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