Dual labor market and the "Phillips curve puzzle": the Japanese experience.

Aoyama, H; Di Guilmi, C; Fujiwara, Y; Yoshikawa, H

Dual labor market and the "Phillips curve puzzle": the Japanese experience.

Aoyama, H Di Guilmi, C

Fujiwara, Y Yoshikawa, H

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Publisher:: SPRINGER
Publication Type:: Journal Article
Citation:: J Evol Econ, 2022, 32, (5), pp. 1419-1435
Issue Date:: 2022

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Field	Value	Language
dc.contributor.author	Aoyama, H
dc.contributor.author	Di Guilmi, C https://orcid.org/0000-0001-7786-039X
dc.contributor.author	Fujiwara, Y
dc.contributor.author	Yoshikawa, H
dc.date.accessioned	2023-01-17T03:15:28Z
dc.date.available	2022-06-26
dc.date.available	2023-01-17T03:15:28Z
dc.date.issued	2022
dc.identifier.citation	J Evol Econ, 2022, 32, (5), pp. 1419-1435
dc.identifier.issn	0936-9937
dc.identifier.issn	1432-1386
dc.identifier.uri	http://hdl.handle.net/10453/165059
dc.description.abstract	UNLABELLED: Low inflation was once welcomed by both policymakers and the public. However, Japan's experience during the 1990s changed the consensus of economists and central banks around the world regarding prices. Facing deflation and the zero-interest bound at the same time, the Bank of Japan had difficulty conducting an effective monetary policy, making Japan's stagnation unusually prolonged. The too-low inflation that concerns central banks today translates into the "Phillips curve puzzle." In the United States and Japan, in the course of the recovery from the Great Recession after the 2008 Global Financial Crisis, the unemployment rate had steadily declined to a level commonly regarded as lower than the natural rate or NAIRU. However, inflation remained low. In this paper, we consider a minimal model of the dual labor market to jointly investigate how the different factors affecting the structural evolution of the labor market have contributed to the observed flattening of the Phillips curve. We find that the level of bargaining power of workers, elasticity of the supply of labor to wage in the secondary market, and composition of the workforce are the main factors jointly explaining the evidence for Japan. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1007/s00191-022-00781-8.
dc.format	Print-Electronic
dc.language	eng
dc.publisher	SPRINGER
dc.relation.ispartof	J Evol Econ
dc.relation.isbasedon	10.1007/s00191-022-00781-8
dc.rights	info:eu-repo/semantics/openAccess
dc.subject	1401 Economic Theory, 1402 Applied Economics
dc.subject.classification	Economics
dc.title	Dual labor market and the "Phillips curve puzzle": the Japanese experience.
dc.type	Journal Article
utslib.citation.volume	32
utslib.location.activity	Germany
utslib.for	1401 Economic Theory
utslib.for	1402 Applied Economics
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Economics Discipline
utslib.copyright.status	open_access	*
dc.date.updated	2023-01-17T03:15:27Z
pubs.issue	5
pubs.publication-status	Published
pubs.volume	32
utslib.citation.issue	5

Abstract:

UNLABELLED: Low inflation was once welcomed by both policymakers and the public. However, Japan's experience during the 1990s changed the consensus of economists and central banks around the world regarding prices. Facing deflation and the zero-interest bound at the same time, the Bank of Japan had difficulty conducting an effective monetary policy, making Japan's stagnation unusually prolonged. The too-low inflation that concerns central banks today translates into the "Phillips curve puzzle." In the United States and Japan, in the course of the recovery from the Great Recession after the 2008 Global Financial Crisis, the unemployment rate had steadily declined to a level commonly regarded as lower than the natural rate or NAIRU. However, inflation remained low. In this paper, we consider a minimal model of the dual labor market to jointly investigate how the different factors affecting the structural evolution of the labor market have contributed to the observed flattening of the Phillips curve. We find that the level of bargaining power of workers, elasticity of the supply of labor to wage in the secondary market, and composition of the workforce are the main factors jointly explaining the evidence for Japan. SUPPLEMENTARY INFORMATION: The online version contains supplementary material available at 10.1007/s00191-022-00781-8.

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http://hdl.handle.net/10453/165059