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Minimum Wages and Anti-Poverty Policies (Japanese)

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  • OHTAKE Fumio

Abstract

This paper examines the effectiveness of minimum wages as an anti-poverty policy based on the textbook labor market model and recent empirical research. In a competitive labor market, it is well known that minimum wages either have a negative or no effect on employment. In a monopsony labor market, a rise in the minimum wage rate may increase both wages and employment. Although most of the empirical research on this topic overseas show that an increase in minimum wages decreases employment, some research show that there is no effect on employment. In Japan, the negative effects of minimum wages on the labor market increased around the late 1990s. The increase in minimum wages is politically preferred as an anti-poverty policy because it does not need fiscal expenditures in the short run. However, it is not an effective anti-poverty policy because most minimum wage workers are not household heads earning more than 5,000,000 yen in annual household income. In order to cope with the increase in poverty among children in Japan, the introduction of a child tax credit system and the enhancement of in-kind benefits such as vouchers for child care, food, and housing are more desirable.

Suggested Citation

  • OHTAKE Fumio, 2013. "Minimum Wages and Anti-Poverty Policies (Japanese)," Discussion Papers (Japanese) 13014, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:rdpsjp:13014
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    File URL: https://www.rieti.go.jp/jp/publications/dp/13j014.pdf
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