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Rising Wage Inequality Within Firms: Evidence from Japanese health insurance society data

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  • SAITO Yukiko
  • KOUNO Toshiaki

Abstract

Using a novel dataset compiled from Japanese health insurance societies covering about 1,500 firms and 15 million employees in total, we examine wage inequality within and between firms. Employing the mean log deviation approach to decompose wage inequality into within-firm and between-firm inequality, we find that it increased among male employees during the period we examined (FY2003-2007). Moreover, even after controlling for changes in the compositional structure of firms' employees, an increase in wage inequality within firms can be observed, greatly contributing to the increase in overall wage inequality, which likely reflects the growing prevalence of performance-based wage systems.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 12039.

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Length: 22 pages
Date of creation: Jun 2012
Date of revision:
Handle: RePEc:eti:dpaper:12039

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  1. Ohtake, F & Saito, M, 1997. "Population Aging and Consumption Inequality," ISER Discussion Paper 0440, Institute of Social and Economic Research, Osaka University.
  2. Gadi Barlevy & Daniel Tsiddon, 2004. "Earnings Inequality and the Business Cycle," NBER Working Papers 10469, National Bureau of Economic Research, Inc.
  3. Oskar Nordström Skans & Per-Anders Edin & Bertil Holmlund, 2009. "Wage Dispersion Between and Within Plants: Sweden 1985-2000," NBER Chapters, in: The Structure of Wages: An International Comparison, pages 217-260 National Bureau of Economic Research, Inc.
  4. Claudia Goldin & Lawrence F. Katz, 2007. "The Race between Education and Technology: The Evolution of U.S. Educational Wage Differentials, 1890 to 2005," NBER Working Papers 12984, National Bureau of Economic Research, Inc.
  5. Ryo Kambayashi & Daiji Kawaguchi & Izumi Yokoyama, 2006. "Wage Distribution in Japan: 1989-2003," Hi-Stat Discussion Paper Series d06-183, Institute of Economic Research, Hitotsubashi University.
  6. Fumio OHTAKE, 2008. "Inequality in Japan," Asian Economic Policy Review, Japan Center for Economic Research, vol. 3(1), pages 87-109.
  7. Richard B. Freeman, 1994. "Working Under Different Rules," NBER Books, National Bureau of Economic Research, Inc, number free94-1.
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