Kawaguchi Daiji (Faculty Fellow, RIETI) and Mori Yuko (Hitotsubashi University) have recently released a study on the effectiveness of minimum wage as an anti-poverty policy in Japan. Below is the abstract:
This paper considers whether minimum wage is a well-targeted anti-poverty policy by examining the backgrounds of minimum-wage workers, and whether raising the minimum wage reduces employment for unskilled workers. An examination of micro data from a large-scale government household survey, the Employment Structure Survey (Shugyo Kozo Kihon Chosa), reveals that about half of minimum-wage workers belong to households with annual incomes of more than 5 million yen [$55,615] as a non-head of household. A regression analysis indicates that an increase in the minimum wage moderately reduces the employment of male teenagers and middle-aged, married females, while it encourages the employment of high school age youth.
In other words, overall employment drops while higher wages push high school aged youth to pursue employment instead of education.
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