Minimum Wage and Employment

As wage inequality widens, great interest has grown in the issue of minimum wage policy as a measure to correct economic inequality. While an increase in the minimum wage may contribute to reducing the wage gap, it is also possible that it exacerbates inequality by decreasing job opportunities for low-paid workers. Justification of a higher minimum wage, therefore, is heavily dependent upon whether and how much this change would decrease jobs.

Research on the effects of minimum wage increase on employment is still at a very early stage in Japan, while in the U.S. a considerable body of research has been accumulated in the past two decades, a part of which has become known in Japan. In particular, research by Professors David Card and Alan Krueger, claiming that minimum wage increase does not affect employment, has attracted attention. But these results are only a part of the vast amount of U.S. research on this subject; research that has not been shared in Japanese academia or in the policy community.

It is in this context that RIETI is holding an international seminar on the issue of minimum wage and employment, inviting Professor David Neumark from the University of California, Irvine, author of a survey covering more than 100 articles and the leading scholar on minimum wage. Professor Neumark will present a summary of U.S. research trends spanning the last two decades, and the following roundtable discussion will address issues such as further information and basic research needed for future discussion on Japanese minimum wage policy. The roundtable participants will include Japanese researchers and policymakers.