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Home > Research and Studies > Bank of Japan Working Paper Series, Review Series, and Research Laboratory Series > Bank of Japan Review Series 2016 > (BOJ Review) What Determines the Base Salary of Full-time/Part-time Workers?
September 30, 2016
Ko Munakata*, Masato Higashi
Research and Statistics Department
We examine the determinants of the base salary of full-time/part-time employees in Japan. The factors that determine the base salary of full-time workers depend primarily on the size of the enterprise that employs the workers. Specifically, the base salary at large enterprises, especially in manufacturing sectors, is influenced by changes in prices, measured by the past inflation rate, via the negotiation process of base pay increase between unions and firms. As for small enterprises, both labor market tightness and margin price (defined as the difference between output and input prices) impact the base salary. On the other hand, the base salary (hourly scheduled cash earnings) of part-time workers is mainly determined by labor market tightness, while it is also affected by minimum wage increases.
Bank of Japan Review is published by the Bank of Japan to explain recent economic and financial topics for a wide range of readers. This report, 2016-E-11, is a translation of the original Japanese version, 2016-J-15, published in August 2016. The views expressed in the Review are those of the authors and do not necessarily represent those of the Bank of Japan.
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