Abstract
Utilizing a panel dataset of firms from 1994–2015, we estimated the per hour wage growth ratio function determined by firm performance. We observed that firms’ productivity growth and profitability positively affected the hourly wage growth ratio. In addition, except for the Japanese midterm boom from 2005 to 2007, firm size decreased per hour wage growth. The results indicated that large firms tend to curb pay wages by hiring irregular employment. By considering recent total factor productivity (TFP) growth stagnation, low TFP growth caused stagnation in hourly wage growth. After Abenomics, the profit margin rose. Thus, recent firms’ profit environment improvement contributed to hourly wage growth.
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