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Dynamic Benefits of Working in Large Cities: Evidence from Japanese matched employer–employee data

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  • KONDO Keisuke

Abstract

This study estimates wage and labor productivity profiles using a matched employer-employee dataset of the Japanese service industry. Our main concern is to uncover how work experience in large cities helps workers dynamically accumulate human capital, by comparing wage and labor productivity profiles. This study finds that longer work experience in larger cities steepens wage and labor productivity profiles, suggesting that upgrading skills by working in large cities provides dynamic benefits of agglomeration economies. Interestingly, this study finds different growth patterns between wage and labor productivity premiums. Labor productivity grows rapidly with longer work experience in large cities, but the growth of the labor productivity premium stops at about 15-20 years of work experience; in contrast, the wage premium grows gradually until about 35 years of work experience.

Suggested Citation

  • KONDO Keisuke, 2017. "Dynamic Benefits of Working in Large Cities: Evidence from Japanese matched employer–employee data," Discussion papers 17043, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:17043
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    File URL: https://www.rieti.go.jp/jp/publications/dp/17e043.pdf
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    References listed on IDEAS

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    1. Jorge De La Roca & Diego Puga, 2017. "Learning by Working in Big Cities," Review of Economic Studies, Oxford University Press, vol. 84(1), pages 106-142.
    2. Fr Gonand & Pierre-André Jouvet, 2015. "The," Post-Print hal-01385977, HAL.
    3. E. D. Gould, 2007. "Cities, Workers, and Wages: A Structural Analysis of the Urban Wage Premium," Review of Economic Studies, Oxford University Press, vol. 74(2), pages 477-506.
    4. Judith K. Hellerstein & David Neumark, 1995. "Are Earnings Profiles Steeper Than Productivity Profiles? Evidence from Israeli Firm-Level Data," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 89-112.
    5. Kawaguchi, Daiji & Kwon, HyeogUg & Shimizutani, Satoshi & Fukao, Kyoji & Makino, Tatsuji & Yokoyama, Izumi & Kambayashi, Ryo & Kim, YoungGak, 2007. "Are Wage‐tenure Profiles Steeper than Productivity‐tenure Profiles?―Evidence from Japanese Establishment Data from the Census of Manufacturers and the Basic Survey Wage Structure―," Economic Review, Hitotsubashi University, vol. 58(1), pages 61-90, January.
    6. Masanori Hashimoto, 1990. "The Japanese Labor Market in a Comparative Perspective with the United States," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number jlm, November.
    7. MORIKAWA Masayuki, 2011. "Urban Density, Human Capital, and Productivity: An empirical analysis using wage data," Discussion papers 11060, Research Institute of Economy, Trade and Industry (RIETI).
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