 Are Productivity and Wages Decoupling in Japan? Divergence between macro and micro relationships (Japanese)Discussion Papers (Japanese) from Research Institute of Economy, Trade and Industry (RIETI) Abstract: Using micro-level data on Japanese firms, this study analyzes the relationship between productivity and wages, as well as trends in the labor share, with a focus on comparing aggregate-level and firm-level figures. The main findings are as follows. First, at the macro level, productivity growth and real wage growth are diverging, but, at the firm level, there is a strong positive relationship between productivity growth and wage growth, indicating that productivity and wages have not decoupled. Second, a divergence exists between simple average and aggregate (i.e., weighted-average) wage trends, with aggregate real wages exhibiting a greater downward trend. Third, dynamic Olley-Pakes decomposition reveals that the covariance term contributes negatively to changes in real wages. In other words, the relationship between higher value-added share and higher wages is weakening. In contrast, in relation to productivity, the covariance term has a large positive effect at the aggregate level. These results suggest that while productivity growth is essential for raising real wages, policies that promote productivity through resource reallocation may conflict with those aimed at increasing labor’s share of value-added. Pages: 30 pages Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eti:rdpsjp:25023 Access Statistics for this paper More papers in Discussion Papers (Japanese) from Research Institute of Economy, Trade and Industry (RIETI) Contact information at EDIRC. |
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