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Applying the Mincer Wage Equation to Japanese Data (Japanese)

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  • KAWAGUCHI Daiji

Abstract

This paper points to several caveats in an estimation of the Mincer wage equation using Japanese data. An estimation of the Mincer wage equation using microdata of the Basic Survey of Wage Structure 2005-2008 reveals following six points as caveats. Wage profile is discontinuous at age 60 because of mandatory retirement. Wage rate, which is the dependent variable of the equation, should be log transformed. Educational attainments should be included as discrete dummy variables rather than a single index as the years of education. Log wage-potential experience profiles differ across educational backgrounds. Log wage-potential experience profiles are well approximated as quadratic functions. Log wage variance within a group defined by educational background and potential experience increases as the years of potential experience increases. Thus, the error term of the Mincer wage equation is heteroskedastic. The analysis also finds that log wage-potential experience profiles of Japan are steeper than the US counterparts based on the Current Population Survey January Supplement .

Suggested Citation

  • KAWAGUCHI Daiji, 2011. "Applying the Mincer Wage Equation to Japanese Data (Japanese)," Discussion Papers (Japanese) 11026, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:rdpsjp:11026
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    File URL: https://www.rieti.go.jp/jp/publications/dp/11j026.pdf
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    Cited by:

    1. Morikawa, Masayuki, 2016. "A comparison of the wage structure between the public and private sectors in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 39(C), pages 73-90.
    2. MORIKAWA Masayuki, 2013. "Postgraduate Education, Labor Participation, and Wages: An empirical analysis using micro data from Japan," Discussion papers 13065, Research Institute of Economy, Trade and Industry (RIETI).
    3. ITO Koji, 2017. "Wage Premium of Exporting Plants in Japan: Do plant and firm size matter?," Discussion papers 17115, Research Institute of Economy, Trade and Industry (RIETI).

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