Labour Market Institutions, Technology and Rent Sharing

In this paper we analyse how labour market institutions and technology affect wagedetermination through rent sharing. To this aim we first extend the theoretical frameworkof Estevao and Tevlin (2003) to account for heterogeneity of labour (regular and non-regularworkers). The predictions of the model are then tested with detailed industry-level data overfour decades (1970-2012) for Japan, where the functioning of labour markets changedsignificantly along directions (de-unionisation, decline in standard employment and in therole of seniority) similar to the majority of advanced OECD countries. Our results indicatethat such labour market evolutions weaken the capacity of regular workers to appropriaterents and might have contributed shaping the long-run wage stagnation observed in Japan.However, more advanced technologies help regular workers to appropriate higher rents