Minimum Wage as a Wage Policy Tool in Japan
21 Pages Posted: 20 Jan 2017
Date Written: November 2016
Abstract
Using prefectural data, we study the potential impact on wage dynamics of the planned minimum wage increase policy in Japan. Our main result is that stepping up minimum wage growth from 2 to the planned 3 percent per year could raise wage growth by 0.5 percent annually. Given Japan's need for income policies to generate vigorous wage-price dynanics, reflecting the 2 percent inflation target, one policy implication of this finding is that, while the minimum wage plan will help boost wages, it should be accompanied by other, more 'unorthodox' income policies, such as a 'soft target' for private sector wage growth through a 'comply -or-explain mechanism' for wage growth and increases in public wages in line with the inflation target.
Keywords: Minimum wages, Japan, Wage policy, Income distribution, Women, Labor market characteristics, Regression analysis, minimum wage, income policies, Abenomics
JEL Classification: J31, J33, E64
Suggested Citation: Suggested Citation