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Decreasing wage returns to human capital: Analysis of wage and job experience using micro data of workers☆

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  • Kimura, Taro
  • Kurachi, Yoshiyuki
  • Sugo, Tomohiro

Abstract

Recent literature reports a decrease in wage returns to skills since the 2000s. This paper contributes additional evidence that this trend is also occurring with skills that accumulate through job experience. We use micro data of Japanese workers to analyze this phenomenon by taking advantage of unique Japanese employment practices that emphasize skills acquired through tenure and on-the-job training as important human capital. We find that (1) wage returns to job experience have significantly decreased from the 2000s to the 2010s and (2) decomposing the human capital into general and firm-specific, the returns to the latter have decreased significantly.

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  • Kimura, Taro & Kurachi, Yoshiyuki & Sugo, Tomohiro, 2022. "Decreasing wage returns to human capital: Analysis of wage and job experience using micro data of workers☆," Journal of the Japanese and International Economies, Elsevier, vol. 66(C).
    • Handle: RePEc:eee:jjieco:v:66:y:2022:i:c:s0889158322000260
    DOI: 10.1016/j.jjie.2022.101217
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    More about this item

    Keywords

    Wage returns; Skills; On-the-job training; General human capital; Firm-specific human capital;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J26 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Retirement; Retirement Policies
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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