This article argues that up until the 1990s, Japanese labor law facilitated private bargaining instead of engineering a desired outcome directly through legal regulations. Through this indirect approach, Japanese labor law made a highly positive contribution to the attainment of economic efficiency. After the 1990s, the merits of Japanese employment customs diminished and while such reforms were made in some aspects, Japanese labor law has taken the stance of directly regulating the economy which has hindered the performance of the Japanese economy.
