A Microeconomic Analysis of the Declining Labor Share in Japan

23 Pages Posted: 19 Apr 2019

See all articles by Kyoji Fukao

Kyoji Fukao

Hitotsubashi University - Institute of Economic Research

Koji Ito

affiliation not provided to SSRN

Cristiano Perugini

University of Perugia - Department of Economics, Finance and Statistics

Date Written: February 22, 2019

Abstract

The labor share in Japan has been declining significantly over the last three decades, accompanied by persistent stagnation and an unprecedented increase in economic inequalities. Since these dynamics are likely to be interrelated, understanding the drivers of the labor share might contribute significantly to the Japanese economic and policy debate. Surprisingly, the existing literature on the labor share in Japan is rather limited and confined to country or industry studies. We first attempt to analyze the drivers of the labor share in Japan at the firm level. To this aim, we employ a panel of manufacturing firms from the Basic Survey of Japanese Business Structure and Activities, spanning from 2001 to 2012. By means of panel data estimators, we show how, besides technological variables, firms’ labor share depends significantly on the share of regular workers, on the importance of firms’ international engagement, and on various institutional settings of the product and labor markets.

Keywords: labor share, firm-level analysis, Japan, panel data

JEL Classification: D33, F61, J30, L11

Suggested Citation

Fukao, Kyoji and Ito, Koji and Perugini, Cristiano, A Microeconomic Analysis of the Declining Labor Share in Japan (February 22, 2019). ADBI Working Paper 925, Available at SSRN: https://ssrn.com/abstract=3374755 or http://dx.doi.org/10.2139/ssrn.3374755

Kyoji Fukao (Contact Author)

Hitotsubashi University - Institute of Economic Research ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8306
Japan

Koji Ito

affiliation not provided to SSRN

Cristiano Perugini

University of Perugia - Department of Economics, Finance and Statistics ( email )

Italy

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