Wage and Productivity differentials in Japan. The Role of Labor Market Mechanisms

Yannick Kalantzis, Ryo Kambayashi () and Sebastien Lechevalier

Working papers from Banque de France

Abstract: This paper aims at explaining two stylized facts of the Lost Decade in Japan: rising wage inequalities and increasing firm-level productivity differentials. We build a model where firms can choose between efficiency wages with endogenous effort and competitive wages, and show that it can replicate those facts. Using Japanese microeconomic data, we find support for the existence of efficiency wages in one group of firms and competitive wages in the other group. Based on those results, a simulation shows that the share of firms using efficiency wages has declined, within sectors, during the Lost Decade, as predicted by the model.

Keywords: heterogeneity of firms; efficiency wages; job security; effort; productivity differentials; wage inequalities; matched employer-employee data. (search for similar items in EconPapers)
JEL-codes: J24 J31 J42 L23 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2012
New Economics Papers: this item is included in nep-eff and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Journal Article: Wage and Productivity Differentials in Japan: The Role of Labor Market Mechanisms (2012)
Working Paper: Wage and Productivity Differentials in Japan: The Role of Labor Market Mechanisms (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:bfr:banfra:399

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