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Decreasing Wage Returns to Human Capital: Analysis of Wage and Job Experience Using Micro Data of Workers

Author

Listed:
  • Taro Kimura

    (Bank of Japan)

  • Yoshiyuki Kurachi

    (Bank of Japan)

  • Tomohiro Sugo

    (Bank of Japan)

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 decreased from the 2000s to the 2010s and (2) decomposing the human capital into general and firm-specific, the returns to both have decreased. We also examine whether the recent trend of firms extending retirement age contributes to the decrease in returns, and we find that its impact has been marginal.

Suggested Citation

  • Taro Kimura & Yoshiyuki Kurachi & Tomohiro Sugo, 2019. "Decreasing Wage Returns to Human Capital: Analysis of Wage and Job Experience Using Micro Data of Workers," Bank of Japan Working Paper Series 19-E-12, Bank of Japan.
    • Handle: RePEc:boj:bojwps:wp19e12
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    File URL: http://www.boj.or.jp/en/research/wps_rev/wps_2019/data/wp19e12.pdf
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    References listed on IDEAS

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    Cited by:

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    2. Wataru Hirata & Toshitaka Maruyama & Tomohide Mineyama, 2020. "Flattening of the Wage Phillips Curve and Downward Nominal Wage Rigidity: The Japanese Experience in the 2010s," Bank of Japan Working Paper Series 20-E-4, Bank of Japan.

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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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