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Rise in Wage Inequality between Firms: Evidence from Japan 1995-2013

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  • KAMBAYASHI Ryo
  • TANAKA Satoshi
  • YAMAGUCHI Shintaro

Abstract

Using firm employer-employee matched data, we document changes in wage inequality in Japan from 1995 to 2013. We find that between-firm logwage variance rose and led to the rise in the overall logwage variance for male full-time workers, while within-firm logwage variance remain unchanged. The rise of between-firm variance is driven by changes in returns based on firms’ technology and other characteristics, firm fixed effects, and the entry and exit of firms. By contrast, changes in the distribution of observed firm characteristics and returns to human capital had little effect on the between-firm logwage variance.

Suggested Citation

  • KAMBAYASHI Ryo & TANAKA Satoshi & YAMAGUCHI Shintaro, 2024. "Rise in Wage Inequality between Firms: Evidence from Japan 1995-2013," Discussion papers 24032, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:24032
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    References listed on IDEAS

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    1. Erling Barth & Alex Bryson & James C. Davis & Richard Freeman, 2016. "It's Where You Work: Increases in the Dispersion of Earnings across Establishments and Individuals in the United States," Journal of Labor Economics, University of Chicago Press, vol. 34(S2), pages 67-97.
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