Minimum Wage as a Wage Policy Tool in Japan

IMF Working Papers, November 28, 2016

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Minimum Wage as a Wage Policy Tool in Japan

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Bibliographic details

• Authors: Chie Aoyagi, Giovanni Ganelli, Nour Tawk
• Published: November 28, 2016
• Series: IMF Working Papers
• DOI: https://doi.org/10.5089/9781475555349.001

Summary and main finding

• Using prefectural data, the study assesses the potential impact on wage dynamics of the planned minimum wage increase policy in Japan.
• Main result: stepping up minimum wage growth from 2 to the planned 3 percent per year could raise wage growth by 0.5 percent annually.

Policy implications and recommendations

• Given Japan’s need for income policies to generate vigorous wage-price dynanics, reflecting the 2 percent inflation target, the minimum wage plan should be accompanied by other income policies.
• Recommended complementary measures:
  • Adopt more “unorthodox” income policies alongside minimum wage increases.
  • Implement a “soft target” for private sector wage growth through a “comply -or-explain mechanism” for wage growth.
  • Increase public wages in line with the inflation target.

Research context and scope

• Data and approach:
  • Analysis uses prefectural data to study wage dynamics under the planned minimum wage increase.
• Subjects covered:
  • Labor, Minimum wages, Real wages, Wage adjustments, Wages
• Keywords explicitly used in the study:
  • 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

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