published as 'Labour market regimes, technology and rent-sharing in Japan' in: Economic Modelling, 2022, 112, 105856
In this paper we analyse how labour market institutions and technology affect wage
determination through rent sharing. To this aim we first extend the theoretical framework
of Estevao and Tevlin (2003) to account for heterogeneity of labour (regular and non-regular
workers). The predictions of the model are then tested with detailed industry-level data over
four decades (1970-2012) for Japan, where the functioning of labour markets changed
significantly along directions (de-unionisation, decline in standard employment and in the
role of seniority) similar to the majority of advanced OECD countries. Our results indicate
that such labour market evolutions weaken the capacity of regular workers to appropriate
rents and might have contributed shaping the long-run wage stagnation observed in Japan.
However, more advanced technologies help regular workers to appropriate higher rents.
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