Is Downward Wage Flexibility the Primary Factor of Japan's Prolonged Deflation?

Sachiko Kuroda, Isamu Yamamoto

    Research output: Contribution to journalArticle

    9 Citations (Scopus)

    Abstract

    By using both macro- and micro-level data, this paper investigates how wages and prices evolved during Japan's lost two decades. We find that downward nominal wage rigidity was present in Japan until the late 1990s, but disappeared after 1998 as annual wages became downwardly flexible. Moreover, nominal wage flexibility may have contributed to Japan's relatively low unemployment rates. Although macro-level movements in nominal wages and prices seemed to be synchronized, such synchronicity is not observed at the industry level. Therefore, wage deflation does not seem to be a primary factor of Japan's prolonged deflation.

    Original languageEnglish
    Pages (from-to)143-158
    Number of pages16
    JournalAsian Economic Policy Review
    Volume9
    Issue number1
    DOIs
    Publication statusPublished - 2014 Jan

    Fingerprint

    deflation
    nominal wage
    wage
    flexibility
    Japan
    macro level
    rigidity
    unemployment rate
    micro level
    unemployment
    Factors
    Wage flexibility
    Wages
    Deflation
    industry

    Keywords

    • Deflation
    • Downward nominal wage rigidity
    • Japan's lost two decades
    • Japanese labor market
    • Unit labor cost

    ASJC Scopus subject areas

    • Economics, Econometrics and Finance(all)
    • Management, Monitoring, Policy and Law
    • Political Science and International Relations

    Cite this

    Is Downward Wage Flexibility the Primary Factor of Japan's Prolonged Deflation? / Kuroda, Sachiko; Yamamoto, Isamu.

    In: Asian Economic Policy Review, Vol. 9, No. 1, 01.2014, p. 143-158.

    Research output: Contribution to journalArticle

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