Capital and Labour in Japan investigates the working of the capital and labour markets in Japan both theoretically and empirically. The working of the two factor markets - capital and labour - affects the Japanese economy and its firms. Both markets contribute to production, and production is more efficient when these two markets function well. The supply-demand relationships (of labour and capital input) determine the outcome of markets. This book investigates whether or not the function of these markets has been efficient in the past, to enhance the competitive power of the Japanese economy, and what changes the future might bring. Toshiaki Tachibanaki and Atsuhiro Taki emphasise several institutional features in Japan which differ from those in Euro-American countries: for example, the permanent employment and seniority system in wages and promotion, the dual structure, Keiretsu transactions, the main bank system, and intercorporate shareholding. This book examines in particular, both theoretically and empirically, the distinction between long-run and short-run contractual relationships which produced such features; and it presents both the positive and the negative evaluations of the factor market. Exploring the similarities and interdependencies between two important and idiosyncratic factor markets in Japan, this book brings data to hand which until now has only been available in specialist journals.