Japan’s Policy Choices for Managing Import Shocks on Jobs and Wages

This study explores the policies and factors driving Japan’s success in managing the negative job and wage impacts of import shocks. Examining the estimated impacts from the mid-1990s to the mid-2010s reveals three key characteristics of the Japanese economy that mitigate the negative impacts:deep integration into global supply chains, an egalitarian intra-firm labor market, and the propagation of trade benefits to non-trading firms. These features reduce the need for import-specific policies. Instead, general policies aimed at mitigating the negative effects, irrespective of their source, have fewer side effects and are more effective.