Our wage equations are based on the wage equation found in the Annex of the OECD Economic Survey: Japan ( OECD, 1990). This wage equation is specified as a short-run Phillip's curve, with wage growth as the dependent variable.
Equation 6.1: WageG = a0 + a1Jo/a + a2P + a3Prod + a4ToT
Equation 6.2: WageG = a0 + a1UR + a2P + a3Prod + a4ToT
WageG = annual growth rate of nominal wages (all industries)
UR = the actual rate of unemployment
Jo/a = ratio of job openings to applications
P = annual rate of growth of consumer prices, average of the current and previous period
Prod = annual rate of productivity growth (GNP/Total Employment)
ToT = terms-of-trade indicator, defined as the CPI growth rate minus the GNP deflator growth rate
Ordinary least squares estimates over the period 1965:2 to 1993:2 yielded the following results.
|Note: t-statistics in parenthesis.|
|Time Period||Sum of Residuals||
|Source: Bank of Japan (monthly, 1965-1996); International Monetary Fund ( 1996); Mitsubishi Economic Research|
Institute (monthly, 1965-D).
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Publication information: Book title: Work and Pay in the United States and Japan. Contributors: Clair Brown - Author, Yoshifumi Nakata - Author, Michael Reich - Author, Lloyd Ulman - Author. Publisher: Oxford University Press. Place of publication: New York. Publication year: 1997. Page number: 189.
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