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The Industrial Organization of the Japanese Bar: Levels and Determinants of Attorney Income

Author

Listed:
  • Minoru Nakazato

    (University of Tokyo Law Faculty)

  • Mark Ramseyer

    (Harvard Law School)

  • Eric Rasmusen

    (Department of Business Economics and Public Policy, Indiana University Kelley School of Business)

Abstract

Using micro-level data on attorney incomes, we reconstruct the industrial organization of the Japanese legal services industry. These data suggest a bifurcated bar, with two sources of unusually high income: an idiosyncratic return to talent in Tokyo, and a compensating differential for the lack of amenities in the provinces. The most able would-be lawyers (those with the highest opportunity costs) pass the bar-exam equivalent on one of their first tries or abandon the effort. If they pass, they tend to opt for careers in Tokyo that involve complex litigation and business transactions. This work places a premium on their talent, and from it they earn appropriately high incomes. The less talented face lower opportunity costs, and willingly spend many years studying for the exam. If they eventually pass, they opt either for relatively low-income careers in Tokyo, or for a practice in the provinces that pays a compensating differential for the lower levels of amenities.

Suggested Citation

  • Minoru Nakazato & Mark Ramseyer & Eric Rasmusen, 2008. "The Industrial Organization of the Japanese Bar: Levels and Determinants of Attorney Income," Working Papers 2008-18, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    • Handle: RePEc:iuk:wpaper:2008-18
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    File URL: http://kelley.iu.edu/riharbau/RePEc/iuk/wpaper/bepp2008-18-nakazato-ramseyer-rasmusen.pdf
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    References listed on IDEAS

    as
    1. Milhaupt, Curtis J. & West, Mark D., 2004. "Economic Organizations and Corporate Governance in Japan: The Impact of Formal and Informal Rules," OUP Catalogue, Oxford University Press, number 9780199272112.
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    Cited by:

    1. J. Mark Ramseyer & Eric Rasmusen, 2013. "Lowering the Bar to Raise the Bar: Licensing Difficulty and Attorney Quality in Japan," Working Papers 2013-12, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    2. Eiji Yamamura, 2011. "Brand and Performance in a New Environment: Analysis of the Law School Market in Japan," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 39(2), pages 155-164, June.
    3. Yamamura, Eiji, 2010. "The effect of learning varies according to locality: Micro data analysis of the lawyer market in Japan," Japan and the World Economy, Elsevier, vol. 22(3), pages 193-197, August.
    4. Ramseyer, J. Mark & Rasmusen, Eric B., 2007. "Political uncertainty's effect on judicial recruitment and retention: Japan in the 1990s," Journal of Comparative Economics, Elsevier, vol. 35(2), pages 329-345, June.
    5. Yamamura Eiji, 2008. "The Market for Lawyers and Social Capital: Are Informal Rules a Substitute for Formal Ones?," Review of Law & Economics, De Gruyter, vol. 4(1), pages 499-517, December.

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    More about this item

    JEL classification:

    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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