The Effect of Import Competition on Wages in the Japanese Manufacturing Sector

Abstract

This study estimates the effect of import competition in the final goods market on workers’ wages in the Japanese manufacturing sector by constructing a panel of matched worker–firm data for 1998–2013 wages. The baseline results show that import competition does not decrease unskilled workers’ wages and increases the skill premia of workers with college degrees or those in managerial and professional positions. Large firms and firms with low productivity also increased their wage premia through import competition, but the degree of increase due to firm-level factors is much smaller than that due to factors related to workers’ skill.