Career Crisis? Impacts of Financial Shock on the Entry-Level Labor Market: Evidence from Thailand

We utilize Thailand's the financial crisis in 1997 as a natural experiment which exogenously shifts labor demand. Convincing evidence from the Thailand Labor Force Survey support the hypothesis that both employment opportunities and wages shrunk for new entrants after the crisis. We find that workers who entered before the crisis experienced job losses and wage losses. But these losses were smaller than those of new entrants after the crisis. We also find that new entrants after the crisis experienced a 10% reduction in the overtime wages compared to new entrants before the crisis.

Temporary jobs and globalization

Deregulation of the use of temporary workers in 2004 (the Worker Dispatching Act of 2004) has been regarded as an important reason for the recent rise of temporary workers in Japan. However, the shift from permanent to temporary workers began long before. This paper empirically explores links between the shift from permanent to temporary workers in the Japanese manufacturing sector and economic globalization, using industry-level data. We find that outsourcing is positively correlated with the replacement of permanent workers with temporary workers in domestic production. In addition, we find that industries losing world share of value added tend to decrease the employment of permanent workers. Industries with higher exports or imports are aggressive in using temporary workers, which suggests the role of temporary workers as an employment buffer.