Wage Fluctuations in Japan after the Bursting of the Bubble Economy: Downward Nominal Wage Rigidity, Payroll, and the Unemployment Rate
In this paper, we investigate the existence and persistence of downward nominal wage rigidity (DNWR) for full-time employees based on the wage fluctuations observed in Japan following the bursting of the bubble economy of the early 1990s. We also examine the extent to which DNWR has boosted firms' real payroll adjusted for labor productivity. We then estimate a version of the Phillips curve with DNWR to measure the impact of DNWR on Japan's unemployment rate. We summarize the results of this paper as follows. First, DNWR measured by the total annual earnings of full-time employees in Japan was observed from 1992 to 1997, but disappeared after 1998. Second, DNWR observed from 1992 to 1997 seemed to have raised firms' real payroll adjusted for labor productivity during a period in which both inflation and labor productivity growth were low. Third, our estimation results suggest that DNWR from 1992 to 1997 raised the unemployment rate by approximately 1 percentage point at the most, although it may overstate the effect of DNWR on unemployment.
Volume (Year): 23 (2005)
Issue (Month): 2 (May)
|Contact details of provider:|| Postal: 2-1-1 Nihonbashi, Hongoku-cho, Chuo-ku, Tokyo 103|
Web page: http://www.imes.boj.or.jp/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nishizaki, Kenji & Watanabe, Tsutomu, 2000. "Output-Inflation Trade-Off at Near-Zero Inflation Rates," Journal of the Japanese and International Economies, Elsevier, vol. 14(4), pages 304-326, December.
- 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.
- William Poole, 1999.
"Is Inflation Too Low?,"
Cato Journal, Cato Institute, vol. 18(3), pages 453-464, Winter.
- Tobin, James, 1972. "Inflation and Unemployment," American Economic Review, American Economic Association, vol. 62(1), pages 1-18, March.
- Lebow David E & Saks Raven E & Wilson Beth Anne, 2003. "Downward Nominal Wage Rigidity: Evidence from the Employment Cost Index," The B.E. Journal of Macroeconomics, De Gruyter, vol. 3(1), pages 1-30, October.
- Louis N. Christofides & Man Tuen Leung, 2002.
"Nominal Wage Rigidity in Contract Data: A Parametric Approach,"
University of Cyprus Working Papers in Economics
0210, University of Cyprus Department of Economics.
- Louis N. Christofides & Man Tuen Leung, 2003. "Nominal Wage Rigidity in Contract Data: A Parametric Approach," Economica, London School of Economics and Political Science, vol. 70(280), pages 619-638, November.
- Kimura, Takeshi & Ueda, Kazuo, 2001. "Downward Nominal Wage Rigidity in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 15(1), pages 50-67, March.
- Kahn, Shulamit, 1997. "Evidence of Nominal Wage Stickiness from Microdata," American Economic Review, American Economic Association, vol. 87(5), pages 993-1008, December.
When requesting a correction, please mention this item's handle: RePEc:ime:imemes:v:23:y:2005:i:2:p:1-29. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kinken)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.