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

Author Info

Listed author(s):
  • Ryo Kambayashi

    ()

    (Institute of Economic Research, Hitotsubashi University)

  • Daiji Kawaguchi

    ()

    (Faculty of Economics, Hitotsubashi University)

  • Ken Yamada

    ()

    (Singapore Management University, School of Economics)

Abstract

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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File URL: https://mercury.smu.edu.sg/rsrchpubupload/17486/07_2013.pdf
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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
Publication status: Published in SMU Economics and Statistics Working Paper Series
Handle: RePEc:siu:wpaper:07-2013
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Keywords: minimum wage; wage inequality; employment loss; truncated distribution; deflation;

Other versions of this item:

Find related papers by JEL classification:
  • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
  • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
  • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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  16. Lawrence F. Katz & Gary W. Loveman & David G. Blanchflower, 1995. "A Comparison of Changes in the Structure of Wages in Four OECD Countries," NBER Chapters,in: Differences and Changes in Wage Structures, pages 25-66 National Bureau of Economic Research, Inc.
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  18. Stephen Machin & John Van Reenen, 1998. "Technology and Changes in Skill Structure: Evidence from Seven OECD Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1215-1244.
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  21. repec:fth:prinin:300 is not listed on IDEAS
  22. David S. Lee, 1999. "Wage Inequality in the United States During the 1980s: Rising Dispersion or Falling Minimum Wage?," The Quarterly Journal of Economics, Oxford University Press, vol. 114(3), pages 977-1023.
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Cited by:

  1. Jeremy Lise & Nao Sudo & Michio Suzuki & Ken Yamada & Tomoaki Yamada, 2014. "Wage, Income and Consumption Inequality in Japan, 1981-2008: from Boom to Lost Decades," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 17(4), pages 582-612, October.
  2. KAWAGUCHI Daiji & MORI Yuko, 2014. "Winning the Race against Technology," Discussion papers 14017, Research Institute of Economy, Trade and Industry (RIETI).
  3. Yamada, Ken, 2016. "Tracing the impact of large minimum wage changes on household welfare in Indonesia," European Economic Review, Elsevier, vol. 87(C), pages 287-303.
  4. Ken Yamada & Daiji Kawaguchi, 2012. "Changing Unchanged Inequality: Higher Education, Youth Population, and the Japan's Seniority Wages," Global COE Hi-Stat Discussion Paper Series gd12-243, Institute of Economic Research, Hitotsubashi University.
  5. Kawaguchi, Daiji & Mori, Yuko, 2016. "Why has wage inequality evolved so differently between Japan and the US? The role of the supply of college-educated workers," Economics of Education Review, Elsevier, vol. 52(C), pages 29-50.

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