Wage and Productivity differentials in Japan. The Role of Labor Market Mechanisms
AbstractThis 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.
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Bibliographic InfoPaper provided by Banque de France in its series Working papers with number 399.
Length: 45 pages
Date of creation: 2012
Date of revision:
heterogeneity of firms; efficiency wages; job security; effort; productivity differentials; wage inequalities; matched employer-employee data.;
Other versions of this item:
- Yannick Kalantzis & Ryo Kambayashi & Sébastien Lechevalier, 2012. "Wage and Productivity Differentials in Japan: The Role of Labor Market Mechanisms," LABOUR, CEIS, vol. 26(4), pages 514-541, December.
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-10-06 (All new papers)
- NEP-EFF-2012-10-06 (Efficiency & Productivity)
- NEP-LMA-2012-10-06 (Labor Markets - Supply, Demand, & Wages)
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