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Are Japanese Nominal Wages Downwardly Rigid? (Part I): Examinations of Nominal Wage Change Distributions

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  • Kuroda, Sachiko

    (Institute for Monetary and Econ Studies, Bank of Japan)

  • Yamamoto, Isamu

    (Institute for Monetary and Econ Studies, Bank of Japan)

Abstract

This paper examines downward nominal wage rigidity in Japan at the individual level using Japanese longitudinal data. By observing the nominal wage change distributions and applying several statistical tests for asymmetry to them, we obtain the following findings. First, using 1993-98 data, the nominal wage change distributions are statistically skewed to the right with large spikes near the zero points, which indicates that downward nominal wage rigidity does exist in Japan. Second, the extent of the downward nominal wage rigidity is sensitive to the choice of nominal wage measures. While the extent of the downward rigidity for the hourly wages of part-time female employees is substantial, those for the regular monthly salaries and annual earnings of full-time male and female employees are limited in the sense that approximately one-fourth of the full-time employee samples experience nominal cuts. Third, for the regular monthly salaries of male employees only, the observed right-skewness of the nominal wage distributions tends to decrease as the inflation rate rises, although the analysis is limited to a period with an extremely low inflation rate.

Suggested Citation

  • Kuroda, Sachiko & Yamamoto, Isamu, 2003. "Are Japanese Nominal Wages Downwardly Rigid? (Part I): Examinations of Nominal Wage Change Distributions," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(2), pages 1-29, August.
  • Handle: RePEc:ime:imemes:v:21:y:2003:i:2:p:1-29
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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