The effect of employer tenure on wages in Japan

Ayaka Nakamura ()
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Ayaka Nakamura: Ryukoku University

The Japanese Economic Review, 2024, vol. 75, issue 1, No 7, 214 pages

Abstract: Abstract We estimate the effects of employer tenure on wages using the instrumental variable (IV) methodology by analyzing data from the Japan Household Panel Survey and Keio Household Panel Survey from 2004 to 2014. We find that the estimates based on the IV method, which corrects for omitted variable bias due to individuals’ unobserved abilities and unobserved matching qualities, are significantly lower than those found using the ordinary least squares methodology. These results are robust across subsamples and specifications and cannot be rejected using an alternative estimation method. Our findings suggest that the recent returns on employer tenure in the Japanese labor market are likely to be lower than those discussed in previous studies.

Keywords: Human capital; Matching; Wage profile; Instrumental variable method (search for similar items in EconPapers)
JEL-codes: J24 J31 R23 (search for similar items in EconPapers)
Date: 2024
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DOI: 10.1007/s42973-022-00116-z

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