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Minimum Wage as a Wage Policy Tool in Japan
Author:
Ms. Chie Aoyagi
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,
Mr. Giovanni Ganelli
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, and
Nour Tawk
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Series:
IMF Working Papers
Volume/Issue:
Volume 2016: Issue 232
Language:
English
Publication Date:
28 Nov 2016
DOI:
https://doi.org/10.5089/9781475555349.001
ISBN:
9781475555349
ISSN:
1018-5941
Pages:
20
Keywords:
WP; wage; wage growth; government; real wage; worker; minimum wage; income policies; Abenomics; wage distribution; distribution studies; wage-price dynamics; percentile data; Minimum wages; Wage adjustments; Wages; Real wages
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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Using prefectural data, we study the potential impact on wage dynamics of the planned minimum wage increase policy in Japan. Our main result is that stepping up minimum wage growth from 2 to the planned 3 percent per year could raise wage growth by 0.5 percent annually. Given Japan’s need for income policies to generate vigorous wage-price dynanics, reflecting the 2 percent inflation target, one policy implication of this finding is that, while the minimum wage plan will help boost wages, it should be accompanied by other, more “unorthodox” income policies, such as a “soft target” for private sector wage growth through a “comply -or-explain mechanism” for wage growth and increases in public wages in line with the inflation target.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund