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Changes in the Structure of Wages: The U.S. versus Japan

  • Lawrence F. Katz
  • Ana L. Revenga

This paper examines changes in wage differentials by educational attainment and experience in the US. and Japan since the early 1970s. While educational earnings differentials have expanded dramatically in the U.S. in the 1980s, the college wage premium has increased only slightly in Japan. In contrast to the large expansion in experience differentials for high school males in the U.S., the wages of male new entrants have risen relative to more experienced workers for both high school and college graduates in Japan from 1979 to 1987. Macroeconomic factors (increased openness, trade deficits, and labor market slack) and changes in institutional structures (the decline in unionization) are likely to have amplified each other in contributing to an unprecedented decline in real and relative earnings of young less-skilled - males in the U.S. in the 1980s. We further find that a sharp deceleration in the rate of growth of college graduates as a fraction of the labor force in the U.S. helps account for the much larger increase in the college wage premium in the U.S. than in Japan in the 1980s.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3021.

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Date of creation: Jul 1989
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Publication status: published as "Changes in the Structure of Wages: The United States vs Japan." From Journal of the Japanese and International Economies, Vol. 3, No. 4, pp. 522-553, (1989).
Handle: RePEc:nbr:nberwo:3021
Note: LS
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  1. Richard B. Freeman, 1975. "Overinvestment in College Training?," Journal of Human Resources, University of Wisconsin Press, vol. 10(3), pages 287-311.
  2. Frank Levy, 1989. "Recent Trends in U.S. Earnings and Family Incomes," NBER Chapters, in: NBER Macroeconomics Annual 1989, Volume 4, pages 73-120 National Bureau of Economic Research, Inc.
  3. Richard B. Freeman & Marcus E. Rebick, 1989. "Crumbling Pillar? Declining Union Density in Japan," NBER Working Papers 2963, National Bureau of Economic Research, Inc.
  4. Freeman, Richard B, 1977. "The Decline in the Economic Rewards to College Education," The Review of Economics and Statistics, MIT Press, vol. 59(1), pages 18-29, February.
  5. Richard B. Freeman, 1981. "The Changing Economic Value of Higher Education in Developed Economies: A Report to the O.E.C.D," NBER Working Papers 0820, National Bureau of Economic Research, Inc.
  6. Carl Mosk & Yoshi-Fumi Nakata, 1985. "The Age-Wage Profile and Structural Change in the Japanese Labor Market for Males, 1964-1982," Journal of Human Resources, University of Wisconsin Press, vol. 20(1), pages 100-116.
  7. John Bound & George E. Johnson, 1989. "Changes in the Structure of Wages During the 1980's: An Evaluation of Alternative Explanations," NBER Working Papers 2983, National Bureau of Economic Research, Inc.
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