Minimum Wages and Productivity: Evidence from Japan

         
Author Name MORIKAWA Masayuki (Vice President, RIETI)
Creation Date/NO. September 2019 19-P-015
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Abstract

The main objectives of a minimum wage are to ensure that low-wage workers have appropriate earnings and to reduce inequality. However, there is an active debate as to whether minimum wages improve productivity. This study presents evidence on the relationship between minimum wages and productivity using regional and firm-level panel data for Japan, where statutory minimum wages are determined at the prefecture-level and revised annually. The estimation results do not reveal evidence that an increase in minimum wages improves productivity.

This is the English version of the Japanese Discussion Paper (19-P-012) with some additional information and changes.