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Why Are Japanese Wages so Sluggish?

  • Martin Sommer

Over the past decade, productivity-adjusted wages have grown at a slower pace in Japan than in other rich countries. This paper suggests that Japan''s dualities between regular and "nonregular" labor market contracts and the relatively inefficient services sector have exacerbated the negative impact of globalization and technical change on the labor income share felt in all advanced economies. Reforms aimed at increasing productivity in services and reducing gaps in employment protection and benefits between regular and nonregular workers could help put Japan''s wages on an upward trajectory in the medium term.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 09/97.

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Length: 21
Date of creation: 01 May 2009
Date of revision:
Handle: RePEc:imf:imfwpa:09/97
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  1. Robert C. Feenstra, 2007. "Globalization and Its Impact on Labour," wiiw Working Papers 44, The Vienna Institute for International Economic Studies, wiiw.
  2. Samuel Bentolila & Gilles Saint Paul, 1999. "Explaining movements in the labor share," Economics Working Papers 374, Department of Economics and Business, Universitat Pompeu Fabra.
  3. Andrea Bassanini & Romain Duval, 2006. "Employment Patterns in OECD Countries: Reassessing the Role of Policies and Institutions," OECD Social, Employment and Migration Working Papers 35, OECD Publishing.
  4. Oliver J. Blanchard, 1997. "The Medium Run," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(2), pages 89-158.
  5. Florence Jaumotte & Irina Tytell, 2007. "How Has the Globalization of Labor Affected the Labor Income Share in Advanced Countries?," IMF Working Papers 07/298, International Monetary Fund.
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