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The Journal of Economic Inequality

, Volume 13, Issue 1, pp 129–153 | Cite as

The changing and unchanged nature of inequality and seniority in Japan

  • Ken YamadaEmail author
  • Daiji Kawaguchi
Article

Abstract

Wage inequality declined in the 1990s, while it increased in the 2000s for full-time male workers in Japan. We find that a decreased return to firm-specific human capital, which has been neglected in previous empirical analyses of inequality, is a key factor preventing a rise in wage inequality during the prolonged period of economic stagnation, known as Japan’s lost decades. We also find that, while changes in returns to general and specific human capital contributed to narrowing wage inequality in the 1990s and widening wage inequality in the 2000s, a significant fraction of the increase in wage inequality in the 2000s is attributable to composition effects arising from an increased share of educated and experienced workers, among whom wages are more dispersed.

Keywords

Wage inequality Firm-specific human capital Heterogeneous returns Seniority wages Composition effects 

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Copyright information

© Springer Science+Business Media New York 2015

Authors and Affiliations

  1. 1.School of EconomicsSingapore Management UniversityBras BasahSingapore
  2. 2.Faculty of EconomicsHitotsubashi UniversityTokyoJapan

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