Wage Stagnation and Productivity Pass-Through: Evidence from Japanese Manufacturing

Ken Yamada

No 26281, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: This paper examines productivity pass-through to wages in Japanese manufacturing from 1980 to 2019. Over the four decades, I combine establishment-level production data with worker-level employment and wage data to measure the productivity environments faced by workers of each type and estimate their pass-through to wages. Productivity pass-through is positive and often sizable in earlier periods, declines over time, and becomes small across all six worker types defined by sex and age. The decline in productivity pass-through is concentrated primarily in the component capturing mean wage growth across job types, rather than in the components capturing changes in the relative wage structure and employment reallocation across job types. Counterfactual accounting shows that this decline contributes more to wage stagnation than the slowdown in productivity growth. Pass-through is lower with higher capital intensity, employment concentration, and part-time employment. Among the observed changes in these production and labor-market characteristics, the implied reduction from the increase in capital intensity is the largest. Pass-through is generally larger for productivity changes with broader regional scope.

Keywords: Wage stagnation; productivity pass-through; wage decomposition; labor productivity (search for similar items in EconPapers)
JEL-codes: E24 J24 J31 J42 (search for similar items in EconPapers)
Date: 2026-10
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