Decomposing Wage Stagnation: Employment Reallocation, Wage Structure,and Demographics

Ken Yamada

Papers from arXiv.org

Abstract: Japan's average log real hourly wages rose from the 1980s to the mid-1990s, declined through the mid-2010s, and partially recovered thereafter. This paper decomposes these changes from 1980 to 2024 into four components: demographic change across worker types, employment reallocation across job types, changes in relative wage structure across job types, and unweighted mean wage growth. The first two represent different margins of adjustment in employment, while the latter two represent different margins of adjustment in wages. The framework combines a shift-share decomposition across worker types with an augmented Olley-Pakes decomposition across job types within worker types. Employment reallocation reflects changes in employment shares across job types, whereas changes in relative wage structure reflect changes in average log wages within job types that alter wage differences across job types. The contributions of the four components vary across periods. Before 1996, unweighted mean wage growth and changes in relative wage structure contribute positively, while demographic change and employment reallocation contribute negatively. During the 1996-2014 period, unweighted mean wage growth and changes in relative wage structure turn negative, so that all four components are negative. After 2014, the recovery mainly reflects unweighted mean wage growth. The contributions from employment reallocation and changes in relative wage structure differ not only between full-time and part-time jobs but also across establishment sizes and industries within employment type. The paper uses the same framework to decompose changes in Japan's gender wage gap.

Date: 2026-07, Revised 2026-10
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://arxiv.org/pdf/2607.01561 Latest version (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:arx:papers:2607.01561

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().