The improvement in Japan's labor productivity has encountered a stagnation since the mid–1990s. A contributing factor to this phenomenon lies in the pattern of labor mobility across industries. Labor productivity growth can be deconstructed into two main components: the “within” component, representing the enhancement of productivity within individual industries, and the “structural change” component, indicating the impact of labor shifting to other industries with varying levels of productivity. Our analysis reveals that the latter has exerted a diminishing influence, and the overall impact of both components is gradually waning. Notably, there is a discernible flow of labor from the manufacturing industry, characterized by relatively higher productivity, towards the service industry, where productivity tends to be lower. Within the service industry itself, the labor trend leans towards low–productivity and low–wage sectors, such as medical, healthcare, welfare, scientific research, professional, and technical services. It can be posited that this trend of labor migration towards sectors with lower levels of labor productivity serves as a hindrance to the overall increase in labor productivity.