Basic Facts

Part of the SpringerBriefs in Economics book series (BRIEFSECONOMICS)


This chapter provides an overview of the long-term trends in the Japanese manufacturing labor market focusing on wage inequality between skilled and unskilled labor, and analyzes how the recent changes in Japan’s trade structure contributed to the widening wage inequality. The relative wage of skilled labor to unskilled labor, represented by nonproduction to production workers and college graduates to high school graduates in the manufacturing industry, has been steadily increasing since the 1980s accompanied by an increase in the relative employment of skilled labor to unskilled labor. Therefore, if we are to view these relative wages and employment in a simple supply-demand framework, it is safe to say that relative demand for skilled labor increased at least to the same extent, or more than relative supply. This chapter pays special attention to the recent changes in Japan’s trade structure as one of the important factors underlying this relative demand shift, and explains the mechanism of how increased trade, especially with Asian countries, widens wage inequality in Japan in a theoretical framework of the HOS model.


Wage inequality Skilled labor and unskilled labor Supply-demand framework Trade structure HOS model 


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Copyright information

© Development Bank of Japan 2017

Authors and Affiliations

  1. 1.Department of EconomicsSenshu UniversityKanagawaJapan
  2. 2.Research Institute of Capital FormationDevelopment Bank of JapanTokyoJapan

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