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Winning the Race against Technology

  • KAWAGUCHI Daiji
  • MORI Yuko

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.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 14017.

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Length: 48 pages
Date of creation: Apr 2014
Date of revision:
Handle: RePEc:eti:dpaper:14017
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