Why Has the Fraction of Contingent Workers Increased? A Case Study of Japan

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This paper explains the secular increase of contingent workers in Japan whose share of employment increased from 17 to 34 percent between 1986 and 2008. Changes in labor-forceand industrial compositions explain about one quarter of the increase of contingent workers. The uncertainty of product demand and the introduction of information and communication technologies increased firms' usage of contingent workers. The increase of contingent workers was concentrated among new entrants to the labor market, male workers of younger cohorts, and female workers of all cohorts, suggesting that the declining importance of the long-term employment relationship is a major cause for the increase of contingent workers.