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Minimum wage in a deflationary economy: The Japanese experience, 1994–2003

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  • Kambayashi, Ryo
  • Kawaguchi, Daiji
  • Yamada, Ken

Abstract

The statutory minimum wage in Japan has increased continuously for a few decades until the early 2000s even during a period of deflation. This paper examines the impact of the minimum wage on wage and employment outcomes under this unusual circumstance. We find that the minimum-wage increase resulted in the compression of the lower tail of the wage distribution among women and that the wage compression is only partially attributable to the loss of employment. The continuous increase in the minimum wage accounts for one half of the reduction in lower-tail inequality that occurred among women during the period between 1994 and 2003.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 24 (2013)
Issue (Month): C ()
Pages: 264-276

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Handle: RePEc:eee:labeco:v:24:y:2013:i:c:p:264-276

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Web page: http://www.elsevier.com/locate/labeco

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Keywords: Minimum wage; Wage inequality; Employment loss; Truncated distribution; Deflation;

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References

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Cited by:
  1. KAWAGUCHI Daiji & MORI Yuko, 2014. "Winning the Race against Technology," Discussion papers 14017, Research Institute of Economy, Trade and Industry (RIETI).
  2. Jeremy Lise & Nao Sudo & Michio Suzuki & Ken Yamada & Tomoaki Yamada, . "Wage, Income and Consumption Inequality in Japan, 1981-2008: from Boom to Lost Decades," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics.
  3. Ken Yamada & Daiji Kawaguchi, 2012. "Changing Unchanged Inequality: Higher Education, Youth Population, and the Japan's Seniority Wages," Global COE Hi-Stat Discussion Paper Series gd12-243, Institute of Economic Research, Hitotsubashi University.

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