【Discussion Paper Series by ESRC-JSPS Research Project on Japan and the UK】
Impact of Foreign Workers on Economic Growth: The Case of Japan
The aim of this paper is to analyse the impact of foreign workers on economic growth in Japan by estimating translog production functions on prefectural panel data. The estimation result shows that foreign workers, especially the skilled, can be identified as a distinctive factor of production for gross prefectural product (GPP). However, the result also finds that the elasticities of GPP with respect native workers as well as foreign workers are negative. In addition, the result indicates that foreign workers, especially the unskilled, have a negative impact on total factor productivity. These findings are in contrast with the findings of Peri (2012) which shows that foreign workers contribute to economic growth in the United States by their role as both factors of production and stimulants of productivity. The difference in the impact of foreign workers on economic growth may be explained by the inflexibility of the current institutional arrangement in Japan, especially that of the employment system.
