The effects of the bursting of the bubble economy placed pressures on Japanese companies to seek lower costs of production. Many Japanese companies sought lower-cost labor outside of Japan. These actions initiated the widening of the wage gap between higher-skilled and lower-skilled workers within Japan as the demand for lower-skilled workers diminished. Further, these actions reinforced the wage gap between male and female workers in Japan.

At a macro level in the Japanese economy, wage inequality is increasing in proportion to overall population growth. As an example, the population growth rate in from 2000 to 2001 was 0.16 percent, while the wage disparity between upper-level management and production workers in Japan increased by 16 percent from 2000 to 2001.

When considered by industry/economic sector, age, and gender, however, wage differentials in Japan are dramatic. In every industry/economic sector, wage levels increase with age through the 50-to-54 year old age group. After that age, wage levels steadily decline through retiremen

1.2 Potential Unintended Consequences

The policy issue derived from the research involves the necessity to develop policies that will be effective in preventing a further increase in wage inequality in Japan. The major concerns in relation to this policy issue are the substantial wage inequalities related to gender (where the average wage level for male workers is substantially higher than that for female workers) and skill-level (where the wage gap between high-skilled workers and low-skilled workers is growing). A failure to address effectively these two facets of wage inequality in Japan likely will lead to levels of wage inequality in Japan that have the potential to damage social unity in the country.

Abernathy, V. D. Immigration Moratorium. Nashville, Tennessee: Vanderbilt University Medical School, 3 August 2001, 1. Retrieved from the Internet 2003-01-29 at: http://www.carryingcapacity.org/va.html

t age at 65 in an absolute sense. The wage pattern by age follows a curve that peaks in the 50-to-54 year old age group. Young workers receive the highest average wages in construction and real estate, with the lowest average wages for younger workers in mining. In the 50-to-54 year old age group, the highest average wages are in the transportation industry, while the lowest average wages are in retail and wholesale trade. At retirement age, the highest average wages are in financial services, while the lowest average wages are in retail and wholesale trade. Generally, industries/economic sectors requiring the highest skilled workers pay higher average wages than do industries/economic sectors where the work involves higher levels of physical risk. This latter pattern is not unusual because people with higher skill levels typically can avoid work in mines and other dangerous occupations, while unskilled workers frequently have no options other than physicall