Non‐standard Employment and Rent‐sharing

In this paper, we analyse how non‐standard (or non‐regular) employment affects the capacity of regular workers to appropriate rents. In this context, we first extend the theoretical framework of Estevão and Tevlin to account for the heterogeneity of labour (regular and non‐regular workers). The predictions of the model are then tested with detailed industry‐level data over four decades (1970–2012) for Japan, where, similar to the majority of advanced OECD countries, the role of standard employment has declined significantly. After controlling for worker characteristics (gender, age, education) and using an array of econometric approaches, our results indicate that in contexts characterized by a higher share of non‐regular employment, rent‐sharing by regular workers is lower. This might have contributed to the long‐run wage stagnation observed in Japan in recent decades.