Meanwhile, GDP per capita is low compared to the other developed countries. There is a concern that Japan's economic strength is lessened due to a declining birthrate and a growing proportion of elderly people. Improving productivity is essential for sustainable development in Japan, and there is a discussion that an increase in minimum wage may contribute to productivity improvement of firms and industries. This is because higher minimum wage increases labor costs of firms, which provides

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... rate managers with incentives for cost reduction. However, there is no clear conclusions from previous studies on this issue. This study applies stochastic frontier analysis to prefecture-level data and examines influence of minimum wage on productivity.