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Minimum Wage in a Deflationary Economy: The Japanese Experience, 1994–2003

  • Ryo Kambayashi

    ()

    (Institute of Economic Research, Hitotsubashi University)

  • Daiji Kawaguchi

    ()

    (Faculty of Economics, Hitotsubashi University)

  • Ken Yamada

    ()

    (Singapore Management University, School of Economics)

The statutory minimum wage in Japan has increased continuously for a few decades until the early 2000s even during a period of deflation. This paper examines the impact of the minimum wage on wage and employment outcomes under this unusual circumstance. We find that the minimum-wage increase resulted in the compression of the lower tail of the wage distribution among women and that the wage compression is only partially attributable to the loss of employment. The continuous increase in the minimum wage accounts for one half of the reduction in lower-tail inequality that occurred among women during the period between 1994 and 2003.

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Paper provided by Singapore Management University, School of Economics in its series Working Papers with number 07-2013.

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Length: 37 pages
Date of creation: Oct 2013
Date of revision:
Publication status: Published in SMU Economics and Statistics Working Paper Series
Handle: RePEc:siu:wpaper:07-2013
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