WAGE STRUCTURE IN THE JAPANESE LABOR MARKET: AN ANALYSIS OF DIFFERENTIATION & DETERMINATION BASED ON DEVELOPMENTS IN THE 1980s & 1990s
This research investigates the wage structure in the Japanese labor market, with a focus on differentiation in wages and determination mechanisms based on developments in the Japanese economy in the 1980s and 1990s. The thesis of this investigation has three facets. The first facet of the thesis is that wage inequality in Japan is increasing. The second facet of the thesis is that the locus of the greatest wage inequality in Japan over the coming decade will occur in relation to skill-levels, with the continually widening wage gap between higher-skilled workers and lower-skilled workers likely to continue to exacerbate wage inequality in Japan in the absence of effective governmental policies to address the situation. The third facet of the thesis is that the widening gap in wages between higher-skilled workers and lower-skilled workers will be exacerbated by the existing wage gap based on employee gender in the absence of effective policies designed to increase average wage levels for female workers in relation to male workers, although the gender-based wage gap in Japan narrowed somewhat in the 1990s.
Toshiaki Tachibanaki, Professor of Economics at Kyoto University, wrote in 1998 that Japan was moving away from the equality in income and financial assets that the country developed through post-Second World War reforms and high levels of economic growth. His conclusion was that Japan was moving steadily in the direction of inequality. Tachibanaki attributed the beginning of the erosion of equality to the economic distortions created by the "bubble economy" of the 1980s and, in turn, the effects of the distortions in asset values on the mechanisms that determine income distribution.
The effects of the bursting of the bubble economy placed pressures on Japanese companies to seek lower cos...