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Increases in non-regular employment and wage inequalities: A dynamic general equilibrium analysis

Author

Listed:
  • Tamotsu Nakamura

    (Graduate School of Economics, Kobe University)

  • Hiroyuki Takami

    (Oita University)

Abstract

This paper presents a simple dynamic general equilibrium model to examine a recent increase in wage inequality between regular and non-regular workers accompanied by a sharp increase in the non-regular workers' share of total employment in Japan. In the model in this paper, firms accumulate regular workers as an asset while they hire non-regular workers in the competitive market in each period. The wage of the regular workers is determined according to an efficiency wage hypothesis while the non-regular workers' wage is equal to the marginal products. A large negative productivity shock can be a cause of the aforementioned phenomena while a small one cannot. Also, a rise in the voluntary quit rate of regular workers, which has been observed in the recent Japanese labor market, increases both the non-regular workers' share and wage inequality over time.

Suggested Citation

  • Tamotsu Nakamura & Hiroyuki Takami, 2011. "Increases in non-regular employment and wage inequalities: A dynamic general equilibrium analysis," Discussion Papers 1103, Graduate School of Economics, Kobe University.
    • Handle: RePEc:koe:wpaper:1103
    as

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    More about this item

    Keywords

    Regular workers; Non-regular workers; Wage inequality; Adjustment costs for labor;
    All these keywords.

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E25 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Aggregate Factor Income Distribution
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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