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Job Tenure versus Age: Effects on Wages and the Implication of Consumption for Wages

In: Internal Labour Markets, Incentives and Employment

Author

Listed:
  • Souichi Ohta
  • Toshiaki Tachibanaki

Abstract

In this chapter we are interested in explaining the upward-sloping wage profiles in Japanese firms. There are in fact many hypotheses explaining upward-sloping wage profiles. For example, the theory of human capital states that earnings growth represents the return to human capital embedded in workers. Alternatively, one may stress the upward-sloping wage profile as playing the role of an incentive device. However, few studies have attempted to incorporate the effect of consumption profile on wage growth over the life cycle. The hypothesis presented in this chapter is that some part of earnings growth can be explained by the fact that firms determine wage profiles taking account of the consumption pattern of workers. Some possible theoretical explanations are examined. We look for models in which wage and consumption profiles are jointly determined, and both of them are closely and positively related.

Suggested Citation

  • Souichi Ohta & Toshiaki Tachibanaki, 1998. "Job Tenure versus Age: Effects on Wages and the Implication of Consumption for Wages," Palgrave Macmillan Books, in: Isao Ohashi & Toshiaki Tachibanaki (ed.), Internal Labour Markets, Incentives and Employment, chapter 3, pages 49-77, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-37797-4_3
    DOI: 10.1057/9780230377974_3
    as

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