Bank of Japan, 2017, “Features of Japan’s Labor Market and Macro-Level Wages,” Box 2, Outlook for Economic Activity and Prices, July, Bank of Japan: Tokyo.
Bank of Japan, 2018, “The Recent Increase in Labor Supply and Wage Developments,” Box 1, Outlook for Economic Activity and Prices, July, Bank of Japan: Tokyo.
International Monetary Fund, 2017, “Recent Wage Dynamics in Advanced Economics: Drivers and Implications,” Chapter 2, World Economic Outlook, October, Washington D.C.
Iwasaki Y., I. Muto, and M. Shintani, 2018, “Missing Wage Inflation? Estimating the Natural Rate of Unemployment in a Nonlinear DSGE model.” 2018 BOJ-IMES Conference, IMES, Bank of Japan.
Watanabe, H. R., 2018, “Labour Market Dualism and Diversification in Japan,” British Journal of Industrial Relations, Vol. 53, Issue 3, pp. 579–602.
Prepared by Niklas Westelius (APD).
Watanabe (2017) suggest that the motivation for the labor market reforms in the late 1990s and early 2000s reflected the need by Japanese companies to increase functional flexibility and decrease production costs in response to intensified regional economic competition.
Bank of Japan (2018) finds that the wage elasticity of labor supply of female and senior part-time workers is higher than working aged men, and argues that this has reduced the impact of increased labor demand on wages.
See Gali (2011) for a theoretical derivation of the negative relationship between labor supply elasticity and the slope of the WPC.
Dummies for VAT rate increases in 1997 and 2014 are also included in all specifications. Results indicates that while the 1997 VAT rate rise did affect wages positively, the 2014 VAT rate increase did the opposite.