The Long‐Run Dynamics of the Labor Share in Japan

Kyoji Fukao and Cristiano Perugini

Review of Income and Wealth, 2021, vol. 67, issue 2, 445-480

Abstract: The structural transformation started in Japan during the last decades of the past century and the institutional adjustments that followed have significantly reshaped personal and functional income distribution patterns. In this paper we investigate the long‐term drivers of the share of output accruing to labor in Japan. Our contribution lies in extending the theoretical SK schedule model by Bentotila and Saint‐Paul to multiple inputs and in providing new empirical evidence on Japan over the period 1970–2012. Results indicate that low‐knowledge‐intensive market services were mainly responsible for the decline in the labor share in Japan over the four decades considered. This was related to technological change and, more importantly, to labor and product market structural and institutional features. These drivers could have significantly contributed to reducing the bargaining power of labor vis‐à‐vis employers and, consequently, the labor share.

Date: 2021
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https://doi.org/10.1111/roiw.12465

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Working Paper: The Long-Run Dynamics of the Labour Share in Japan (2018)
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