The Nature, Scope and Effects of Joint Labor-Management Committees in Japan

In this paper we begin with documenting the nature and scope of a popular participatory employment practice in postwar Japan, or Joint Labor Management Committees (JLMCs), using unique survey data. We combine the survey data with corporate proxy statement data and produce firm-level micro data for over 200 Japanese firms with JLMCs which contain detailed information on various characteristics of their JLMCs. The resulting micro data are then used to estimate the effects on productivity and other outcome measures (such as profitability and labor cost) of varying attributes of Japanese JLMCs. For diverse specifications, consistently we find the positive and highly significant productivity effect of the breadth of information sharing via JLMCs. Specifically, sharing information obtained during JLMC meetings with ALL employees on one additional issue will be associated with a 3% increase in productivity. As such, our findings point to the importance of disseminating information shared via JLMCs widely to all employees. We further identify two important mechanisms through which such information dissemination can occur effectively, i.e., unions and employee participation/involvement at the grassroots level such as Shop Floor Committees. This constitutes yet another example of the complementary role of unions in participatory employment practices and synergy between various participatory employment practices.