Earnings and Seniority in Japan. A Re-appraisal of the Existing Evidence and a Comparison with the UK
Standard estimates of earnings profiles ignore the fact that, with unobserved heterogeneity, cross-section evidence need not reflect the `true' relationship between earnings and tenure. In this paper we argue that the observation of the position filled by an employee in the firm hierarchy is informative about both his/her quality and the quality of his/her match. Under certain assumptions, this information can be used to construct an unbiased estimator of the effects of tenure on earnings growth. We apply this simple idea to Japanese and UK data. We find that tenure effects on earnings are positive but smaller than the effects estimated with the traditional approach. In a comparative perspective, we also find that UK and Japanese earnings profiles are rather similar in banking and finance and remarkably different in manufacturing.
|Date of creation:||Jun 1994|
|Date of revision:|
|Contact details of provider:|| Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ.|
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
|Order Information:|| Email: |
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Collier, P & Knight, J B, 1985. "Seniority Payments, Quit Rates, and Internal Labour Markets in Britain and Japan," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 47(1), pages 19-32, February.
- Devine, Theresa J. & Kiefer, Nicolas M., 1991. "Empirical Labor Economics: The Search Approach," OUP Catalogue, Oxford University Press, number 9780195059366, December.
- Hersch, Joni & Reagan, Patricia, 1990. "Job Match, Tenure and Wages Paid by Firms," Economic Inquiry, Western Economic Association International, vol. 28(3), pages 488-507, July.
- Joseph G. Altonji & Robert A. Shakotko, 1987. "Do Wages Rise with Job Seniority?," Review of Economic Studies, Oxford University Press, vol. 54(3), pages 437-459.
- Katharine G. Abraham & Henry S. Farber, 1986.
"Job Duration, Seniority, and Earnings,"
NBER Working Papers
1819, National Bureau of Economic Research, Inc.
- Sloane, P J & Theodossiou, I, 1993. "Gender and Job Tenure Effects on Earnings," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(4), pages 421-37, November.
- James L. Medoff & Katharine G. Abraham, 1980.
"Experience, Performance, and Earnings,"
NBER Working Papers
0278, National Bureau of Economic Research, Inc.
- Michael Waldman, 1984. "Worker Allocation, Hierarchies and the Wage Distribution," Review of Economic Studies, Oxford University Press, vol. 51(1), pages 95-109.
- Robert H. Topel, 1990.
"Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority,"
NBER Working Papers
3294, National Bureau of Economic Research, Inc.
- Topel, Robert H, 1991. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," Journal of Political Economy, University of Chicago Press, vol. 99(1), pages 145-76, February.
- Lorne Carmichael, 1983.
"Firm-Specific Human Capital and Promotion Ladders,"
Bell Journal of Economics,
The RAND Corporation, vol. 14(1), pages 251-258, Spring.
- Sherwin Rosen, 1982. "Authority, Control, and the Distribution of Earnings," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 311-323, Autumn.
- MacLeod, W Bentley & Malcomson, James M, 1988.
"Reputation and Hierarchy in Dynamic Models of Employment,"
Journal of Political Economy,
University of Chicago Press, vol. 96(4), pages 832-54, August.
- Bentley MacLeod & James M. Malcomson, 1985. "Reputation and Hierarchy in Dynamic Models of Employment," Working Papers 628, Queen's University, Department of Economics.
- Hashimoto, Masanori & Raisian, John, 1985. "Employment Tenure and Earnings Profiles in Japan and the United States," American Economic Review, American Economic Association, vol. 75(4), pages 721-35, September.
- Clark, Robert L & Ogawa, Naohiro, 1992. "Employment Tenure and Earnings Profiles in Japan and the United States: Comment," American Economic Review, American Economic Association, vol. 82(1), pages 336-45, March.
- repec:fth:harver:1532 is not listed on IDEAS
- Marshall, Robert C & Zarkin, Gary A, 1987. "The Effect of Job Tenure on Wage Offers," Journal of Labor Economics, University of Chicago Press, vol. 5(3), pages 301-24, July.
- Michael Kremer, 1993. "The O-Ring Theory of Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 551-575.
When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:974. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.