In other words, such a theoretical mechanism is not operating sufficiently in Japan’s economy today. In what follows, I would like to consider this point from two aspects, first touching on the relationship between labor market conditions and wages, and then that between wages and prices.
The first point is that the pace of improvement in wages has remained only moderate despite the tightening of labor market conditions. This is likely to be attributable to a certain degree to the structure of Japan’s labor market, in which the wage-setting mechanism between full-time and part-time employees is different.