Increases in non-regular employment and wage inequalities: A dynamic general equilibrium analysis

Tamotsu Nakamura () and Hiroyuki Takami
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Tamotsu Nakamura: Graduate School of Economics, Kobe University
Hiroyuki Takami: Oita University

No 1103, Discussion Papers from Graduate School of Economics, Kobe University

Abstract: This paper presents a simple dynamic general equilibrium model to examine a recent increase in wage inequality between regular and non-regular workers accompanied by a sharp increase in the non-regular workers' share of total employment in Japan. In the model in this paper, firms accumulate regular workers as an asset while they hire non-regular workers in the competitive market in each period. The wage of the regular workers is determined according to an efficiency wage hypothesis while the non-regular workers' wage is equal to the marginal products. A large negative productivity shock can be a cause of the aforementioned phenomena while a small one cannot. Also, a rise in the voluntary quit rate of regular workers, which has been observed in the recent Japanese labor market, increases both the non-regular workers' share and wage inequality over time.

Keywords: Regular workers; Non-regular workers; Wage inequality; Adjustment costs for labor (search for similar items in EconPapers)
JEL-codes: E24 E25 J31 (search for similar items in EconPapers)
Pages: 22pages
Date: 2011-04
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Persistent link: https://EconPapers.repec.org/RePEc:koe:wpaper:1103

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