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Wage Structures and Labor Turnover in the U.S. and in Japan

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  • Jacob Mincer
  • Yoshio Higuchi
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    Abstract

    The starting point of this study is the proposition that intensive formation of human capital on the job is the basic proximate reason for the strong degree of worker attachment to the firm in Japan. The greater emphasis on training and retraining, much of it specific to the firm, results also in steeper wage trajectories, due to growth of skills in the firm. We explore this insight more thoroughly by a detailed use of micro-data for the two countries: We measure wage profiles and turnover in age groups, and we test the inverse relation between the two on industry sectors within each of the countries. Using productivity growth indexes for industries in the U.S. and in Japan we test the hypothesis that rapid technical change which induces greater and continuous training, is responsible for steeper profiles, hence indirectly for lesser turnover. The hypothesis is confirmed on the sectoral level in both countries. Finally, we try to standardize for the cultural background of workers, by observing a sample of Japanese plants in the U.S. which employ American workers, and use Japanese labor policies in recruitment and training. We find that the steeper tenure-wage slopes and lower turnover place this sample closer to Japan than to the U.S.

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    File URL: http://www.nber.org/papers/w2306.pdf
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    Bibliographic Info

    Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 2306.

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    Date of creation: Jul 1987
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    Publication status: published as Journal of the Japanese and International Economies, Vol. 2, pp. 97-133,(1988)
    Handle: RePEc:nbr:nberwo:2306

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    Cited by:
    1. Daniel Parent, 1995. "Survol des contributions théoriques et empiriques liées au capital humain," CIRANO Working Papers 95s-28, CIRANO.
    2. Ono, Hiroshi, 2000. "College Quality and Earnings in the Japanese Labor Market," Working Paper Series in Economics and Finance 395, Stockholm School of Economics, revised 06 Sep 2000.
    3. Ono, Hiroshi, 1999. "Does Examination Hell Pay Off? A Cost-Benefit Analysis of "Ronin" and College Education in Japan," Working Paper Series in Economics and Finance 346, Stockholm School of Economics, revised 22 Aug 2000.

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