Ongoing moves for a greater flexibility in the labor market will increase effective labor supply -- a good news as Japan faces a declining population, said James Hosek, professor at Pardee RAND Graduate School.

This flexibility will bring greater value to companies by enabling them to reallocate resources in response to new opportunities, Hosek told the June 3 Keizai Koho Center symposium.

At stake is the "effective" labor supply -- not just in terms of usual measures such as hours of work and the number of people in the labor market, but also workers' "effort" on the job, the professor said.