ABSTRACT
This chapter explores the postwar Japanese experience with financial participation and pay for performance. It presents a result of favorable environments in the postwar Japanese economy, financial participation schemes spread widely and were firmly established. The chapter presents the first main findings from analysis of data collected on the evolving pay system during Japan’s economic slowdown in the 1990s. It discusses the scope and nature of financial participation in postwar Japan and its diffusion over time. The chapter explores theoretical arguments on the effects of financial participation on company performance, in particular on labor productivity, and reviews the evidence on such effects. It reviews the scope and nature of financial participation schemes in Japan and their diffusion among Japanese firms over time. The chapter focuses on the evidence on the effects of such schemes on company performance. It provides new evidence on the recent shift of the Japanese pay system toward pay for performance.
