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Wage Developments in Japan: Four Key Issues for the Post-COVID-19 Wage Growth

Author

Listed:
  • Ichiro Fukunaga

    (Bank of Japan)

  • Kakuho Furukawa

    (Bank of Japan)

  • Shunsuke Haba

    (Bank of Japan)

  • Yoshihiko Hogen

    (Bank of Japan)

  • Yosuke Kido

    (Bank of Japan)

  • Tomohiro Okubo

    (Bank of Japan)

  • Kotaro Suita

    (Bank of Japan)

  • Kosuke Takatomi

    (Bank of Japan)

Abstract

This paper examines various factors that have dampened nominal wage growth in Japan, comparing them with those in the U.S. and Europe, and shows that some of these factors have been changing since around the COVID-19 outbreak. Specifically, we point to the tightening of the labor market conditions partly reflecting demographic trends, the plateauing trend of the part-time worker ratio, signs that the job-to-job transition is becoming more active as wages rise, and an increased consideration of inflation for labor-management wage negotiations. Key issues on the outlook for the pace and durability of nominal wage growth in Japan are (A) whether wages will rise more broadly, including among full-time workers with relatively low mobility, (B) whether firms' growth expectations will increase, boosting investment and leading to higher labor productivity, (C) whether labor mobility will be facilitated by skill upgrading, and (D) whether the situation in which wage increases have been suppressed under the low inflation norm will change so that prices and nominal wages will rise together.

Suggested Citation

  • Ichiro Fukunaga & Kakuho Furukawa & Shunsuke Haba & Yoshihiko Hogen & Yosuke Kido & Tomohiro Okubo & Kotaro Suita & Kosuke Takatomi, 2023. "Wage Developments in Japan: Four Key Issues for the Post-COVID-19 Wage Growth," Bank of Japan Working Paper Series 23-E-4, Bank of Japan.
    • Handle: RePEc:boj:bojwps:wp23e04
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    References listed on IDEAS

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    Cited by:

    1. Date, Daiki & Kurozumi, Takushi & Nakazawa, Takashi & Sugioka, Yu, 2024. "Heterogeneity and wage growth of full-time workers in Japan: An empirical analysis using micro data," Journal of the Japanese and International Economies, Elsevier, vol. 73(C).
    2. Furukawa, Kakuho & Hogen, Yoshihiko & Kido, Yosuke, 2025. "Labor market of regular workers in Japan: A perspective from job advertisement data," Journal of the Japanese and International Economies, Elsevier, vol. 75(C).

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    Keywords

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    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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