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Minimum Wage in a Deflationary Economy: The Japanese Experience, 1994–2003

Author

Listed:
  • Ryo Kambayashi

    (Institute of Economic Research, Hitotsubashi University)

  • Daiji Kawaguchi

    (Faculty of Economics, Hitotsubashi University)

  • Ken Yamada

    (Singapore Management University, School of Economics)

Abstract

The statutory minimum wage in Japan has steadily increased over the past few decades even during a period of deflation. This paper examines the impact of the minimum wage on wage and employment outcomes under this unusual circumstance. We find that the increased bite of the minimum wage resulted in the compression of the lower tail of the wage distribution among women and that the wage compression is partially attributed to employment loss resulting from the minimum-wage increase. The increased bite of the minimum wage accounts for one half of the reduction in lowertail inequality that occurred among women during the period between 1994 and 2003.

Suggested Citation

  • Ryo Kambayashi & Daiji Kawaguchi & Ken Yamada, 2012. "Minimum Wage in a Deflationary Economy: The Japanese Experience, 1994–2003," Working Papers 35-2012, Singapore Management University, School of Economics.
    • Handle: RePEc:siu:wpaper:35-2012
    as

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    File URL: https://mercury.smu.edu.sg/rsrchpubupload/17486/35_2012.pdf
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    References listed on IDEAS

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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The minimum wage under deflation
      by Economic Logician in Economic Logic on 2013-02-07 21:34:00

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    1. Ken Yamada & Daiji Kawaguchi, 2012. "Changing Unchanged Inequality: Higher Education, Youth Population, and the Japan's Seniority Wages," Global COE Hi-Stat Discussion Paper Series gd12-243, Institute of Economic Research, Hitotsubashi University.

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    More about this item

    Keywords

    minimum wage; wage inequality; employment loss; truncated distribution; deflation;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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