{
  "title": "Can Raising Japan's Minimum Wage Accelerate Wage Growth?",
  "publication": "IMF Blog, November 28, 2016",
  "sourceUrl": "https://www.imf.org/en/blogs/articles/2016/11/28/can-raising-japans-minimum-wage-accelerate-wage-growth",
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  "summary": "Japan’s minimum wage is 798 JPY ($6.52) per hour, lower than many other advanced countries, including the United States, and among the lowest relative to the average wage.",
  "sections": [
    {
      "heading": "Context and motivation",
      "content": "- Japan’s minimum wage is 798 JPY ($6.52) per hour, lower than many other advanced countries, including the United States, and among the lowest relative to the average wage.\n- Japan has endured 15 years of deflation; boosting consumer spending through higher wages is seen as important to reinvigorate growth.\n- Large gaps exist in wages and job security between regular and non-regular employees (part-timers, contract workers and temporary staff)."
    },
    {
      "heading": "Policy measure described",
      "content": "- Authorities have put in place plans to increase the minimum wage by 3 percent on a yearly basis.\n- This plan would result in a hike from 798 JPY to over 1,000 JPY per hour by the year 2023."
    },
    {
      "heading": "Main empirical findings",
      "content": "- The population working below or at the current minimum wage is estimated around 10 percent of the working population.\n- Analysis using data for seventeen years (from 1997 to 2014) finds that the planned 3 percent policy would result in an additional 0.5 percent increase in average wages per year.\n- Mechanisms identified:\n  - Firms confronted with having to raise pay (example: from $7 to $8 an hour) may retain current workers given Japan’s tight labor market (record low unemployment and record high labor shortages), leading to higher average wages.\n  - Firms might substitute lower-paid workers with more skilled workers who command even higher wages, also pushing up average wages."
    },
    {
      "heading": "Assessment relative to macro targets",
      "content": "- Bank of Japan’s inflation target of 2 percent.\n- Assuming productivity growth of 1 percent, wages would need to grow by at least 3 percent to have an impact on the inflation target.\n- The projected additional 0.5 percent per year from the minimum wage policy, while significant, would still fall short of the required 3 percent wage growth."
    },
    {
      "heading": "Policy recommendations and complementary measures",
      "content": "- Complement the minimum wage increase with:\n  - Higher public wage increases.\n  - Stronger inducements to raise private wages.\n- Undertake structural reforms as part of a broader “reload” package, including:\n  - Measures to reduce labor market duality between regular and non-regular workers.\n  - Policies to give more bargaining power to workers.\n  - Removing remaining distortions in the tax and social security system that discourage full-time work, mostly of women.\n- Income policies alone are unlikely to revitalize the economy; they should be combined with appropriate monetary and fiscal policy.\n\nLuc Everaert, Giovanni Ganelli; November 28, 2016. IMF Blog.\n\n---\n\n Content in this bundle\n\n- 日本の最低賃金引き上げは、賃金全体の伸びを加速できるか; ルーク・エバアート、ジョバンニ・ガネリ; iMFdirectブログ2016年11月28日\n  - 日本の最低賃金引き上げは、賃金全体の伸びを加速できるか; ルーク・エバアート、ジョバンニ・ガネリ; iMFdirectブログ2016年11月28日 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 日本の最低賃金引き上げは、賃金全体の伸びを加速できるか; ルーク・エバアート、ジョバンニ・ガネリ; iMFdirectブログ2016年11月28日 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\n References\n\n- policies\n- paper\n- https://www.imf.org/wp-content/uploads/2016/11/japan-minwage-chart.jpg\n- reload\n\nSource: https://www.imf.org/en/blogs/articles/2016/11/28/can-raising-japans-minimum-wage-accelerate-wage-growth"
    }
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    "Authors: Luc Everaert, Giovanni Ganelli",
    "Published: November 28, 2016",
    "Japan’s minimum wage is 798 JPY ($6.52) per hour, lower than many other advanced countries, including the United States, and among the lowest relative to the average wage.",
    "Japan has endured 15 years of deflation; boosting consumer spending through higher wages is seen as important to reinvigorate growth.",
    "Large gaps exist in wages and job security between regular and non-regular employees (part-timers, contract workers and temporary staff).",
    "Authorities have put in place plans to increase the minimum wage by 3 percent on a yearly basis.",
    "This plan would result in a hike from 798 JPY to over 1,000 JPY per hour by the year 2023.",
    "The population working below or at the current minimum wage is estimated around 10 percent of the working population.",
    "Analysis using data for seventeen years (from 1997 to 2014) finds that the planned 3 percent policy would result in an additional 0.5 percent increase in average wages per year.",
    "Mechanisms identified:",
    "Bank of Japan’s inflation target of 2 percent.",
    "Assuming productivity growth of 1 percent, wages would need to grow by at least 3 percent to have an impact on the inflation target.",
    "The projected additional 0.5 percent per year from the minimum wage policy, while significant, would still fall short of the required 3 percent wage growth.",
    "Complement the minimum wage increase with:",
    "Undertake structural reforms as part of a broader “reload” package, including:",
    "Income policies alone are unlikely to revitalize the economy; they should be combined with appropriate monetary and fiscal policy.",
    "**日本の最低賃金引き上げは、賃金全体の伸びを加速できるか; ルーク・エバアート、ジョバンニ・ガネリ; iMFdirectブログ2016年11月28日**",
    "[policies](https://blogs.imf.org/2016/03/13/japan-time-to-load-a-fourth-arrow-wage-increases/)",
    "[paper](https://www.imf.org/external/pubs/cat/longres.aspx?sk=44412.0)",
    "[https://www.imf.org/wp-content/uploads/2016/11/japan-minwage-chart.jpg](https://www.imf.org/wp-content/uploads/2016/11/japan-minwage-chart.jpg)",
    "[reload](http://www.imf.org/external/pubs/cat/longres.aspx?sk=44158.0)"
  ],
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      "title": "日本の最低賃金引き上げは、賃金全体の伸びを加速できるか; ルーク・エバアート、ジョバンニ・ガネリ; iMFdirectブログ2016年11月28日",
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