What Happened to Wage Inequality in Japan during the Last 25 Years? Evidence from the FFL decomposition method (original) (raw)

Wage distribution in Japan, 1989–2003

Canadian Journal of Economics/Revue canadienne d'économique, 2008

Diverging economic inequality has become a common focus of economic debate in developed countries. In particular, the recent experience of Japan has started attracting international attention. We take advantage of a rich micro-level data set from the Basic Survey on Wage Structure (1989-2003) to perform an in-depth analysis of the change in the inequality and distribution of the hourly wage. We observe that lower returns to education and years of tenure contribute to diminishing income disparity between groups for both sexes. A larger variance within a group contributes to the wage disparity for males, while an increased heterogeneity of workers' attributes contributes to the wage disparity for females. The Dinardo, Fortin, and Lemieux decomposition also confirms the basic findings from a parametric variance decomposition.

Decades not Lost, but Won: Increased Employment, Higher Wages, and More Equal Opportunities in the Japanese Labour Market

Social Science Japan Journal, 2014

We take a fresh analytical look at the developments in the Japanese labour market over the last two decades and provide answers to three key questions: first, was regular employment replaced by non-regular employment on an aggregate level in general and at the expense of younger generations in particular? Second, how do today's labour market outcomes compare to the heydays of the Japanese economy, i.e. to the late 1980s? Third, have wage gaps between men and women as well as between regular and non-regular employees increased, stayed the same, or shrunk? Contrary to both public perception and many research opinions, we find that the Japanese labour market as a whole has produced normatively positive outcomes of an unexpected magnitude in a long-term perspective. By 2010, employment has expanded beyond the structural frame of 1988 both in its non-standard and in its standard segment. We further find that the increase in non-regular employment was predominantly due to an increase in labour demand, mirrored by a significantly narrowed wage gap between non-standard and standard employment. Lastly, we find that women have made substantial inroads into the labour market, both in terms of regular employment and real wage development.

Japan's New Inequality: Intersection of Employment Reforms and Welfare Arrangements

Asian Studies Review, 2012

Japan's New Inequality is a study of the effects of changes in welfare arrangements and employment reforms in Japan since the collapse of Japan's Bubble Economy in the late 1980s. This volume draws heavily on theories and methods of social stratification studies to explore three general areas: regular and non-regular divisions in labour markets (i.e. between permanent full-time and non-permanent part-time employees); changes in employment structures for women and the self-employed; and changes in family structure, the ageing population and welfare provisions. This volume provides a concise and up-to-date picture of income, wealth and employment inequalities in Japan.

The Re segmentation of the Japanese labor market Investigating the impact of industrial dynamics

The purpose of this paper is to propose a synthesis and an original interpretation of recent empirical works dealing with inequalities in Japan. Most of them have been able to use panel micro data – and sometimes linked employers-employees data – and it has allowed them disentangling individual and firm effects and linking the evolutions of productivity dispersion and of wage differentials. The major result is that rising inequalities in Japan from the 1990s correspond to a large extent to an unprecedented growth in the disparity of wages and employment security between wage earners of comparable status, working in firms of similar size and belonging to the same sector. The second result is that it is possible to link these structural changes on the labor market to industrial dynamics, namely deindustrialization and increasing corporate heterogeneity. We interpret this evolution as a 'resegmentation' of the Japanese labor market.

Wage and Productivity Differentials in Japan: The Role of Labor Market Mechanisms

This paper aims at explaining two stylized facts of the Lost Decade in Japan: rising wage inequalities and increasing firm-level productivity differentials. We build a model where firms can choose between efficiency wages with endogenous effort and competitive wages, and show that it can replicate those facts. Using Japanese microeconomic data, we find support for the existence of efficiency wages in one group of firms and competitive wages in the other group. Based on those results, a simulation shows that the share of firms using efficiency wages has declined, within sectors, during the Lost Decade, as predicted by the model. Yannick KALANTZIS, Ryo KAMBAYASHI, and Sébastien LECHEVALIER

Male-Female Wage and Productivity Differentials: A Structural Approach Using Japanese Firm-level Panel Data

2007

In an attempt to explain the male-female wage differential, we estimated the relative marginal productivity and relative wage of female workers compared to those of male workers, using panel data from Japanese firms. The estimation results indicate that firms hiring 10 percentage points more women produce 0.8 percent more given the total wage bill and other inputs. Crosssectional estimates that neglect firm fixed effects indicate that female workers' per person productivity is 45 percent of male workers', while per person pay is 30 percent of that of male workers. These estimates indicate that part of the wage differential cannot be explained by the productivity differential.

Labour Market Reforms in Japan to Improve Growth and Equity

OECD Economics Department Working Papers, 2011

Labour market reforms in Japan to improve growth and equity Traditional Japanese labour market practices, which benefited both workers and firms during the highgrowth era, are no longer appropriate in the context of slow economic growth and rapid population ageing. Reforms are needed in light of the upward trend in non-regular employment to break down labour market dualism and to encourage greater labour force participation by women, the elderly and youth. A comprehensive approach that includes improving the social insurance coverage of non-regular workers and upgrading training programmes for them, preventing discrimination against non-regular workers and reducing effective employment protection for regular workers would increase labour market flexibility and human capital. Moreover, such reforms would increase equity across different segments of the labour force. Drawing more women into the labour force requires removing financial disincentives to work, creating more family-friendly workplaces and increasing the availability of childcare. The labour force participation of the elderly should be raised by promoting continuous employment and abolishing mandatory retirement. More effective vocational training is needed for younger workers.

Perceptions of “Rising Inequality” in Japan: An Econometric Analysis

2003

Abstract Income inequality has recently aroused considerable public interest in Japan. However, empirical studies have documented that the distributions of income and wages have been rather stable for the same period. This contrast puzzles empirical researchers. We seek to find the sources of such an apparent discrepancy between statistics and perception concerning economic inequality.