Deferred Compensation: Evidence from Employer-Employee Matched Data from Japan
AbstractWage increases, along with job tenure, are one of the most robust empirical regularities found in labor economics. Several theories explain these empirical regularities, and such theories offer sharp empirical predictions for the relation between productivity-tenure and wage-tenure profiles. The human capital model, with cost and benefit sharing between workers and employers, predicts a steeper productivity-tenure profile than wage-tenure profile. The matching quality model predicts that the two profiles will overlap. Theories that involve the information asymmetry between employers and employees predict a steeper wage-tenure profile than productivity-tenure profile to induce workers' effort and enhance efficiency. This paper estimates the productivity-tenure profile and the wage-tenure profile by estimating the plant-level production function and the wage equation using employer-employee matched data from Japan. These estimations offer a comprehensive test for the relative applicability of the two theories on the wage-tenure profile. Estimation results indicate a steeper wage-tenure profile than productivity-tenure profile and point to the relative importance of the deferred wage payment contract.
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Bibliographic InfoPaper provided by Institute of Economic Research, Hitotsubashi University in its series Hi-Stat Discussion Paper Series with number d06-187.
Date of creation: Oct 2006
Date of revision:
Wage; Productivity; Employer-Employee Matched Data; Japan;
Find related papers by JEL classification:
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-25 (All new papers)
- NEP-BEC-2006-11-25 (Business Economics)
- NEP-LAB-2006-11-25 (Labour Economics)
- NEP-SEA-2006-11-25 (South East Asia)
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