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A Microeconomic Analysis of the Declining Labor Share in Japan

Author

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  • Fukao, Kyoji

    (Asian Development Bank Institute)

  • Ito, Koji

    (Asian Development Bank Institute)

  • Perugini, Cristiano

    (Asian Development Bank Institute)

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

  • Fukao, Kyoji & Ito, Koji & Perugini, Cristiano, 2019. "A Microeconomic Analysis of the Declining Labor Share in Japan," ADBI Working Papers 925, Asian Development Bank Institute.
    • Handle: RePEc:ris:adbiwp:0925
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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. Miyoshi, Koyo, 2024. "The decline in the labor share: Evidence from Japanese manufacturers’ panel data," Journal of Asian Economics, Elsevier, vol. 92(C).
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    4. 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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