The effect of import competition on labor income inequality through firm and worker heterogeneity in the Japanese manufacturing sector

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Abstract

This study estimates the effects of import competition from Asia on the labor income inequality of Japanese manufacturing workers, considering firm and worker heterogeneity. Parameters are obtained from regression results of annual salary by using constructed worker–establishment panel data. The estimated salary change is positively and negatively larger for higher- and lower-paid workers, respectively, implying that labor income inequality among industry–size–skill–gender groups has increased due to imports from Asia. However, the actual evolution of income inequality during 1998–2014 is not successfully explained by Asian imports: other shocks overshadow import competition to determine actual income inequality.

Original languageEnglish
Article number101076
JournalJapan and The World Economy
Volume59
DOIs
Publication statusPublished - 2021 Sep

Keywords

  • Firm size
  • Gender
  • Heterogeneity
  • Import competition
  • Inequality
  • Labor income
  • Skill

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics
  • Political Science and International Relations

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