The compatibility of worker’s well-being and firm’s value in Japan

Prof. Isamu Yamamoto
Professor Keio University

In the face of labor shortages, work-style reforms have been taken in recent Japan with the aim of encouraging the participation of diverse talents and increasing productivity. For example, many firms, especially large and/or listed ones, are working on “health management” to increase productivity by addressing the improvement of workers’ health as a management strategy. Similarly, “human capital management,” which aims to maximize the value of human resources as capital, thereby increasing firm’s value over the medium to long term, is also addressed. This movement is replacing the traditional trade-off relationship between worker’s well-being and firm’s value with the compatible one between the two. In this speech, from the perspective of labor economics, I will present empirical findings from several studies using worker and firm data to show a possible positive relationship between worker’s well-being and firm’s value. For example, implementing health management measures can lead to improved health outcomes, which in turn can contribute to an increase in the firm’s profitability. Additionally, improved sleep and work engagement among employees can also lead to higher profit rates for the firm.

Isamu Yamamoto is a professor of labor economics at the Faculty of Business and Commerce, Keio University. He is also Director of the Panel Data Research Center at Keio University, where he is responsible for several household panel surveys representing Japan such as the Japan Household Panel Survey (JHPS). Previously, he was a director and senior economist at the Bank of Japan. He received his Ph.D. in economics from Brown University. As a labor economist, he has been studying working conditions of Japanese workers, focusing on the long work hours, work-life balance, worker’s mental health and well-being, employment status, wage rigidity, employment mobility, gender diversity and others. He now serves as the Principal Investigator of the Grant-in-Aid for Specially Promoted Research by the Japan Society for the Promotion of Science: “Structure and change of broader inequality since the COVID-19 crisis: Economics research based on household panel data.”