It is sometimes said that Japan is experiencing a labour shortage (or at least tightening). In such circumstances, one might expect that workers would move to better paid jobs and force employers to raise wages in response. (This is certainly what has been happening recently in the UK - one of the top news stories this morning is that basic pay growth has risen to 7.8%.) But given the anaemic pay growth in Japan, this doesn't seem to be happening there. I wonder why not? Is it because the relative lack of external labour markets prevents it? In the case of precarious workers (agency etc), is there no labour shortage in this sector that might force up wages? What is going on?

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