Labor Shortages and the Quality of Working Life: Workplace and Household Dimensions from Matched Employer–Employee Data in Japan

In recent years, tightening labor markets across several OECD countries have given rise to widespread labor shortages. Although such shortages are often associated with favorable outcomes, including higher wages, they also coincide with heavier workloads and longer working hours, which may compromise physical and mental health and lower job satisfaction. This study investigates the relationship between labor shortages and job satisfaction using Japanese matched employer–employee data that allow for the identification of shortages at the firm level. Our analysis yields four key findings. First, a consistent negative association is observed between labor shortages and job satisfaction across OLS, ordered logit, matching estimators, and instrumental variable methods. Second, the adverse patterns emerge most clearly when shortages continue for at least two years, indicating that prolonged shortages tend to accumulate pressures that eventually diminish job satisfaction. Third, declines in job satisfaction are most pronounced when shortages are linked to organizational shortcomings—specifically, limited review of business processes and insufficient investment in labor-saving technologies and rationalization measures. Fourth, employees in shortage-exposed firms report longer working hours, fewer opportunities for rest during breaks and leisure activities, and reduced time spent with family at dinner. JEL classification codes : J21; J28