## Structural Barriers to Wage Income Growth in Japan: Japan

_Selected Issues Papers, May 18, 2023_

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## Bibliographic details
- Authors: Rui Xu, Kaustubh Chahande
- Published: May 18, 2023
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798400241734.018

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### Summary
- Stagnant income growth has limited Japan’s growth potential and reflation efforts.
- The paper dissects wage dynamics across different labor groups and identifies structural barriers to income growth.
- Although average income growth has been weak because of the rise of part-time workers and their declining hours, real wages per hour have risen across all labor groups, with the most gain seen among part-time and female workers.
- Weak income growth is largely driven by structural factors, including disincentives for second earners in the social security system, pension policies, and the dual labor market structure.
- Policies to address these structural barriers are key to boosting income growth in Japan.

### Findings on wage dynamics
- Average income growth weak due to:
  - rise of part-time workers
  - declining hours for part-time workers
- Real wages per hour:
  - rose across all labor groups
  - largest gains among part-time workers and female workers
- Dual labor market structure contributes to persistent disparities in wage income growth.

### Identified structural barriers
- Disincentives for second earners in the social security system.
- Pension policies that affect work incentives and income trajectories.
- The broader dual labor market structure that segments full-time and part-time employment and limits overall wage growth.

### Policy implications and recommendations
- Reform social security provisions that create disincentives for second earners to increase labor supply and household income.
- Adjust pension policies to reduce adverse incentives on labor participation and wage progression.
- Address aspects of the dual labor market to narrow gaps between full-time and part-time employment and support more inclusive wage growth.
- Implement policies aimed at sustaining recent gains in real wages per hour for part-time and female workers while facilitating overall income growth.

### Publication and metadata
- Authors: Rui Xu, Kaustubh Chahande
- Date: May 18, 2023
- Pages: 15
- Volume: 2023
- Issue: 031
- Series: Selected Issues Paper No. 2023/031
- DOI: https://doi.org/10.5089/9798400241734.018
- Stock No: SIPEA2023031
- ISBN: 9798400241734
- ISSN: 2958-7875

*Source: Structural Barriers to Wage Income Growth in Japan: Japan, Rui Xu, and Kaustubh Chahande, May 18, 2023.*

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_Source: https://www.imf.org/en/publications/selected-issues-papers/issues/2023/05/18/structural-barriers-to-wage-income-growth-in-japan-japan-533515_