The Great Disconnect: The Decoupling of Wage and Price Inflation in Japan

Takeo Hoshi and Anil Kashyap

No 27332, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We take some well-known observations about the structure of the Japanese labor market and add new evidence about how it has evolved to study inflation in Japan. Our key finding is that labor market dynamics shifted after 1998 so that correlations between labor market tightness and wages weakened noticeably. This change was accompanied in a break in the relationship between wages and prices, so wage inflation has become a much less important determinant of price inflation.

JEL-codes: E31 E50 J31 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-lma and nep-mac
Note: EFG IFM ME
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