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.
minimum wage, wage inequality, employment loss, truncated distribution, deflation
KAMBAYASHI, Ryo; KAWAGUCHI, Daiji; and YAMADA, Ken.
Minimum Wage in a Deflationary Economy: The Japanese Experience, 1994-2003. (2012). Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/1228
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