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Households' Wage Growth Expectations Formation:
The Linkage with Price Inflation Expectations

日本語

May 22, 2026
Takuji Kondo*1
Yuki Takahashi*2
Kosuke Takatomi*3

Abstract

This paper quantitatively investigates how closely Japanese households' wage growth expectations are linked with their price inflation expectations, using microdata from Japanese household surveys. The estimation results reveal that the linkage between wage growth expectations and price inflation expectations has strengthened in recent years. We further find that heterogeneity in the degree of linkage across households is statistically significantly related to the labor market conditions of individual households - such as labor market tightness and labor mobility - as well as their income levels and labor union membership status. Japan's labor market has been experiencing a gradual shrinking of the room for additional labor supply partly due to population aging. Such structural factors may have contributed to the recent strengthening of the linkage. This paper also examines how the strengthening of the linkage affects households' spending attitudes. We find that households with a stronger link tend to maintain relatively stronger spending attitudes even during periods of rising prices, as their expected real income declines are more limited. These findings suggest the importance of wage growth expectations being appropriately linked to price inflation expectations for sustaining consumption and achieving sustainable economic growth.

JEL Classification
D12, D84, E21, E24, E31

Keywords
Price Inflation Expectations, Wage Growth Expectations, Wage Bargaining Power, Household Spending Attitude, Survey Data

The authors would like to express appreciation to Yuichiro Ito, Sohei Kaihatsu, Naoya Kato, Yoshiyuki Kurachi, Takushi Kurozumi, Takahiro Minami, Junko Miyazaki, Jouchi Nakajima, Koji Nakamura, Kaori Ochi, Akio Okuno, Tomoyuki Yagi, and the staff at the Bank of Japan for their valuable comments and suggestions. The authors also thank the Social Science Japan Data Archive, Center for Social Research and Data Archives, Institute of Social Science, The University of Tokyo for providing data from the Questionnaire Survey on Work and Life of Workers. The views expressed in this paper are those of the authors and do not necessarily reflect those of the Bank of Japan.

  1. *1Monetary Affairs Department, Bank of Japan
    E-mail : takuji.kondou@boj.or.jp
  2. *2Monetary Affairs Department (currently Maebashi Branch), Bank of Japan
    E-mail : yuuki.takahashi@boj.or.jp
  3. *3Monetary Affairs Department, Bank of Japan
    E-mail : kousuke.takatomi@boj.or.jp

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