Book contents
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- Introduction
- Part I Features of Japan's internal labor markets
- Part II Recent changes in wage and employment structures
- 7 Institutional changes in Japanese internal labor markets
- 8 Changes in the employment and wage structure of Japanese firms, 1976–1996
- 9 Changes in Japanese earnings profiles
- 10 The impact of growth and business cycles on Japanese corporate hierarchies
- Epilog
- References
- Index
9 - Changes in Japanese earnings profiles
Published online by Cambridge University Press: 22 September 2009
- Frontmatter
- Contents
- List of figures
- List of tables
- Preface
- Introduction
- Part I Features of Japan's internal labor markets
- Part II Recent changes in wage and employment structures
- 7 Institutional changes in Japanese internal labor markets
- 8 Changes in the employment and wage structure of Japanese firms, 1976–1996
- 9 Changes in Japanese earnings profiles
- 10 The impact of growth and business cycles on Japanese corporate hierarchies
- Epilog
- References
- Index
Summary
Overview
As described in chapters 7 and 8, Japanese internal labor markets are undergoing important changes under the pressures of slower growth and an ageing labor force. Some of these changes have affected the compensation system, and several measures have been taken to reduce the importance of age and tenure in individual pay.
The purpose of this chapter is to study from an empirical perspective whether the changing economic environment has affected Japanese earnings profiles – and, in particular, the returns to tenure in the firm. Using two datasets and different estimation strategies, we present evidence that the slope of wage–tenure profiles has declined. We then relate this decline to the slowdown in the rate of economic growth and to the ageing of the Japanese labor force. A brief summary concludes the chapter.
Previous literature
In an exchange in the American Economic Review, Clark and Ogawa (1992) and Hashimoto and Raisian (1992) discussed whether Japanese earnings profiles had changed from the early 1970s to the mid-1980s. Clark and Ogawa (1992) concluded that the value of an extra year of tenure had declined substantially from 1971 to 1986. They explained this finding by the progressive ageing of the Japanese labor force and the increase of the mandatory retirement age from 55 to 60. Hashimoto and Raisian (1992) examined a selected number of years in the 1980s and found that, while there could be some cyclical effects, there was no evidence of a substantial decline in the slope of wage–tenure profiles.
- Type
- Chapter
- Information
- Internal Labour Markets in Japan , pp. 226 - 241Publisher: Cambridge University PressPrint publication year: 2000