Minimum Wage as a Wage Policy Tool in Japan

By Chie Aoyagi, Giovanni Ganelli, Nour Tawk

November 28, 2016

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Chie Aoyagi, Giovanni Ganelli, and Nour Tawk. Minimum Wage as a Wage Policy Tool in Japan, (USA: International Monetary Fund, 2016) accessed December 22, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Labor, Minimum wages, Real wages, Wage adjustments, Wages

Keywords: Abenomics, Distribution studies, Government, Income policies, Minimum wage, Minimum wages, Percentile data, Real wage, Real wages, Wage, Wage adjustments, Wage distribution, Wage growth, Wage-price dynamics, Wages, Worker, WP

Publication Details

Pages:

20
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2016/232
Stock No:

WPIEA2016232
ISBN:

9781475555349
ISSN:

1018-5941

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