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Deflation and Downward Nominal Wage Rigidity: Evidence from Japan

Author

Listed:
  • Kengo Yasui

    (Graduate School of Economics, Osaka University)

  • Shinji Takenaka

    (Graduate School of Economics, Osaka University)

Abstract

This study empirically analyzed downward nominal wage rigidity using time-series cross-industry data from 1981 to 2002, a period which included deflation. We found that nominal wages remained rigid to downward pressure by expected deflation and labor-market tightness. Estimations according to worker age categories revealed downward wage rigidity with deflationary pressure for most age categories. Wage rigidity during labor-market tightness was greater for younger workers.

Suggested Citation

  • Kengo Yasui & Shinji Takenaka, 2005. "Deflation and Downward Nominal Wage Rigidity: Evidence from Japan," Discussion Papers in Economics and Business 05-21, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:0521
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    File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0521.pdf
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    References listed on IDEAS

    as
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    4. Joseph G. Altonji & Paul J. Devereux, 1999. "The Extent and Consequences of Downward Nominal Wage Rigidity," NBER Working Papers 7236, National Bureau of Economic Research, Inc.
    5. Kimura, Takeshi & Ueda, Kazuo, 2001. "Downward Nominal Wage Rigidity in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 15(1), pages 50-67, March.
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    7. McLaughlin, Kenneth J., 1994. "Rigid wages?," Journal of Monetary Economics, Elsevier, vol. 34(3), pages 383-414, December.
    8. Kuroda, Sachiko & Yamamoto, Isamu, 2003. "Are Japanese Nominal Wages Downwardly Rigid? (Part II): Examinations Using a Friction Model," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 21(2), pages 31-68, August.
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    More about this item

    Keywords

    wage rigidity; nominal wage; deflation; unemployment; Japan;
    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
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

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