The Re Segmentation of the Japanese Labor Market Investigating the Impact of Industrial Dynamics

Abstract

The purpose of this paper is to propose a synthesis and an original interpretation of recent empirical works dealing with inequalities in Japan. Most of them have been able to use panel micro data – and sometimes linked employers-employees data – and it has allowed them disentangling individual and firm effects and linking the evolutions of productivity dispersion and of wage differentials. The major result is that rising inequalities in Japan from the 1990s correspond to a large extent to an unprecedented growth in the disparity of wages and employment security between wage earners of comparable status, working in firms of similar size and belonging to the same sector. The second result is that it is possible to link these structural changes on the labor market to industrial dynamics, namely deindustrialization and increasing corporate heterogeneity. We interpret this evolution as a 'resegmentation' of the Japanese labor market.