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Winning the Race against Technology

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  • KAWAGUCHI Daiji
  • MORI Yuko

Abstract

This study examines the importance of the supply factor as a determinant of the college wage premium by comparing the trends of the college wage premium between Japan and the United States. The wage differential between college and high school graduates decreased from 0.35 log point to 0.34 log point in Japan between 1986 and 2008, while during the same period, it increased from 0.43 to 0.65 in the United States. This paper demonstrates that the more rapid increase in the number of college graduates in Japan explains about one-third of these contrasting trends. A simulation indicates that if the supply in the United States had followed that in Japan, the return to college would have increased by 0.15 point instead of the actual 0.23 point. The difference in post-war fertility trends largely explains the difference in the supply increase of college graduates between the two countries.

Suggested Citation

  • KAWAGUCHI Daiji & MORI Yuko, 2014. "Winning the Race against Technology," Discussion papers 14017, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:14017
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    Cited by:

    1. Yoichi Arai & Hidehiko Ichimura & Daiji Kawaguchi, 2014. "The educational upgrading of Japanese youth, 1982-2007: Are Japanese youth ready for structural reforms?," Working Papers e078, Tokyo Center for Economic Research.
    2. Peng, Fei & Anwar, Sajid & Kang, Lili, 2017. "New technology and old institutions: An empirical analysis of the skill-biased demand for older workers in Europe," Economic Modelling, Elsevier, vol. 64(C), pages 1-19.
    3. Russell Cooper & Huacong Liu, 2016. "MisMatch in Human Capital Accumulation," NBER Working Papers 22010, National Bureau of Economic Research, Inc.
    4. Arai, Yoichi & Ichimura, Hidehiko & Kawaguchi, Daiji, 2015. "The educational upgrading of Japanese youth, 1982–2007: Are all Japanese youth ready for structural reforms?," Journal of the Japanese and International Economies, Elsevier, vol. 37(C), pages 100-126.
    5. Naoko Hara & Munechika Katayama & Ryo Kato, 2014. "Rising Skill Premium?: The Roles of Capital-Skill Complementarity and Sectoral Shifts in a Two-Sector Economy," Bank of Japan Working Paper Series 14-E-9, Bank of Japan.
    6. Aizawa, Toshiaki & Dekle, Robert & Helble, Matthias, 2017. "Sources of Income Inequality: A Comparison of Japan and the United States," ADBI Working Papers 663, Asian Development Bank Institute.

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