Impact of international trade on wage inequality in Japanese manufacturing industries

Abstract

This research analyzed the impact of international trade on the wage inequality among workers with three different characteristics in Japanese manufacturing industries: the wage inequality (1) between skilled workers and unskilled workers, (2) between workers in large firms and workers in small firms, and (3) between regular workers and non-regular workers. Chapter 2 presented an empirical analysis on the impact of international trade on wage inequality between skilled and unskilled workers. The hypothesis for the regression analysis was that international trade, either import or export, would raise the wage gap between skilled and unskilled workers. The regression results showed that the hypothesis was not supported and that the regression results with Japanese data were found inconsistent with the existing studies. Chapter 3 examined whether Japanese data could support a theoretical model, which predicted that firms in concentrated industries would lose market power and pay lower wages when increased imports caused competition with foreign suppliers. The regression results rejected the prediction, failing to detect significant relationship between the relative wage and international trade. The regression results with an alternative dataset with education characteristics of workers again rejected the hypothesis that imports would "discipline the market" in concentrated industries. Chapter 4 presented an analysis of the impact of trade on the wage inequality between regular and non-regular workers. The regression results did not provide evidence that international trade would affect the initial relative initial salary of regular workers. The results also found that starting wage of non-regular workers was more sensitive to business environment than starting salary of regular workers. In conclusion, this research did not find evidence to support a hypothesis that international trade reduces the relative wages of unskilled workers, workers in small firms, and non-regular workers in Japanese manufacturing industries. There was no evidence that would justify for a claim for protectionism to prevent a wage decline of domestic workers. Finally, this research identified many potential topics for future analysis, which would provide informative suggestions in the context of social and economic changes in Japanese labor markets.