The Lost Decade in the Japanese Labor Market : LaborÃ¢â‚¬â„¢s share and OkunÃ¢â‚¬â„¢s Law
AbstractThe purpose of this study is to reexamine two empirical regularities in the Japanese labor market : the constant labor share and Okun's law. The former law relates to the price of labor in the labor market while the latter is a quantity law; they represent suitable benchmarks for judging the condition of the labor market. Although there are more elaborate statistical techniques, these laws are frequently used because they can clarify the macroeconomic situation at a glance. First, a constant labor share is implied in theory by the CobbDouglas production function. Thus, labors share should be based on the production function. Labors share based on income has only been rising because of massive depreciation. Secondly, there have been several structural breaks in Okun's law since the bubble collapsed, and the potential growth rate has fallen.
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Bibliographic InfoPaper provided by East Asian Bureau of Economic Research in its series Labor Economics Working Papers with number 22317.
Date of creation: Jan 2006
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labor share; Okun's law;
Find related papers by JEL classification:
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
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