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A Microeconomic Analysis of the Declining Labor Share in Japan

In: Labor Income Share in Asia

Author

Listed:
  • Kyoji Fukao

    (Hitotsubashi University)

  • Koji Ito

    (Ministry of Economy, Trade and Industry)

  • Cristiano Perugini

    (University of Perugia)

Abstract

The labor share in Japan has been declining significantly over the last three decades, accompanied by persistent stagnation and an unprecedented increase in economic inequalities. Since these dynamics are likely to be interrelated, understanding the drivers of the labor share might contribute significantly to the Japanese economic and policy debate. Surprisingly, the existing literature on the labor share in Japan is rather limited and confined to country or industry studies. We first attempt to analyze the drivers of the labor share in Japan at the firm level. To this aim, we employ a panel of manufacturing firms from the Basic Survey of Japanese Business Structure and Activities, spanning from 2001 to 2012. By means of panel data estimators, we show how, besides technological variables, firms’ labor share depends significantly on the share of regular workers, on the importance of firms’ international engagement, and on various institutional settings of the product and labor markets.

Suggested Citation

  • Kyoji Fukao & Koji Ito & Cristiano Perugini, 2019. "A Microeconomic Analysis of the Declining Labor Share in Japan," ADB Institute Series on Development Economics, in: Gary Fields & Saumik Paul (ed.), Labor Income Share in Asia, chapter 0, pages 247-267, Springer.
    • Handle: RePEc:spr:adbchp:978-981-13-7803-4_10
    DOI: 10.1007/978-981-13-7803-4_10
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    Cited by:

    1. Kyoji Fukao & Cristiano Perugini, 2021. "The Long‐Run Dynamics of the Labor Share in Japan," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 67(2), pages 445-480, June.
    2. Chih‐Hai Yang & Meng‐Wen Tsou, 2021. "Globalization and the labor share in China: Firm‐level evidence," Manchester School, University of Manchester, vol. 89(1), pages 1-23, January.
    3. Corbellini, Aldo & Magnani, Marco & Morelli, Gianluca, 2021. "Labor market analysis through transformations and robust multivariate models," Socio-Economic Planning Sciences, Elsevier, vol. 73(C).

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    More about this item

    Keywords

    Labor share; Firm-level analysis; Japan; Panel data;
    All these keywords.

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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