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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. TANAKA Ayumu, 2015. "Wage Premiums for Exporters and Multinational Enterprises: Evidence from Japanese linked employer-employee data," Discussion papers 15106, Research Institute of Economy, Trade and Industry (RIETI).
    3. MORIKAWA Masayuki, 2012. "Postgraduate Education and Human Capital Productivity in Japan," Discussion papers 12009, Research Institute of Economy, Trade and Industry (RIETI).
    4. 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).
    5. 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.
    6. Greaney, Theresa M. & Tanaka, Ayumu, 2021. "Foreign Ownership, Exporting and Gender Wage Gaps: Evidence from Japanese Linked Employer-Employee Data," Journal of the Japanese and International Economies, Elsevier, vol. 61(C).
    7. Hiroshi Teruyama & Hiroyuki Toda, 2017. "Wage Profiles in the Japanese Dual Labor Market," KIER Working Papers 961, Kyoto University, Institute of Economic Research.
    8. 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).
    9. Ayumu Tanaka, 2018. "Why Do Exporters and Multinational Firms Pay Higher Wages?:Evidence from Japanese Linked Employer–Employee Data," Discussion papers e-17-013, Graduate School of Economics , Kyoto University.

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