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Earnings and seniority in Japan: A re-appraisal of the existing evidence and a comparison with the UK

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  • Brunello, Giorgio
  • Ariga, Kenn

Abstract

Standard estimates of earnings profiles ignore the fact that, with unobserved heterogeneity, cross-section evidence need not reflect the `true' relationship between earnings and tenure. In this paper we argue that the observation of the position filled by an employee in the firm hierarchy is informative about both his/her quality and the quality of his/her match. Under certain assumptions, this information can be used to construct an unbiased estimator of the effects of tenure on earnings growth. We apply this simple idea to Japanese and UK data. We find that tenure effects on earnings are positive but smaller than the effects estimated with the traditional approach. In a comparative perspective, we also find that UK and Japanese earnings profiles are rather similar in banking and finance and remarkably different in manufacturing.

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Bibliographic Info

Article provided by Elsevier in its journal Labour Economics.

Volume (Year): 4 (1997)
Issue (Month): 1 (March)
Pages: 47-69
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Handle: RePEc:eee:labeco:v:4:y:1997:i:1:p:47-69

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For corrections or technical questions regarding this item, or to correct its listing, contact: (Jeroen Loos).

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Cited by:
  1. Satoshi Shimizutani & Izumi Yokoyama, 2006. "Has Japan's Long-term employment Practice Survived? New Evidence Emerging Since the 1990s," Hi-Stat Discussion Paper Series d06-182, Institute of Economic Research, Hitotsubashi University.

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