Is the Tenure-Earning Curve Really Steeper in Japan? A Re-examination Based on UK-Japan Comparison

Abstract

Empirical, earnings functions stress the relationship between earnings, seniority, labour market experience and education. In modern labour economics, these functions are an important tool for the description of different labour market institutions. In an influential paper, for instance, Hashimoto and Raisian (1985) compare the results from estimates of similar earnings functions in Japan and in the USA and conclude that the labour markets in the two countries differ rather sharply in the relative importance of the accumulation of firm-specific human capital. In particular, they find that ‘growth rates in earnings attributable to tenure are far greater in Japan than in the United States’ (p. 732).

This chapter was written while the first author was visiting the Institute for Economic Research, Kyōto University. The authors are grateful to the Murata Science Foundation and to Consiglio Nazionale delle Ricerche for financial support. The English data used in this paper were kindly provided by the ESRC Data Archive, Essex University. Earlier versions of the chapter were presented as a paper at Macquarie University, Australian National University, University of Western Australia and also at the 1993 Far Eastern Meeting of the Econometric Society held in Taipei. We are grateful to Leslie Stein, Gerald Garvey, Bruce Chapman, Michael McAleer and Mari Sako for their comments and suggestions, and to Kathy Sayer and Dino Rizzi for help with the British data. We wish to also thank Misuaki Okabe for many editorial suggestions and advice. The usual caveats apply.