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Decreasing Wage Returns to Human Capital: Analysis of Wage and Job Experience Using Micro Data of Workers

Taro Kimura, Yoshiyuki Kurachi and Tomohiro Sugo
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Taro Kimura: Bank of Japan

No 19-E-12, Bank of Japan Working Paper Series from Bank of Japan

Abstract: Recent literature reports a decrease in wage returns to skills since the 2000s. This paper contributes additional evidence that this trend is also occurring with skills that accumulate through job experience. We use micro data of Japanese workers to analyze this phenomenon by taking advantage of unique Japanese employment practices that emphasize skills acquired through tenure and on-the-job training as important human capital. We find that (1) wage returns to job experience have decreased from the 2000s to the 2010s and (2) decomposing the human capital into general and firm-specific, the returns to both have decreased. We also examine whether the recent trend of firms extending retirement age contributes to the decrease in returns, and we find that its impact has been marginal.

Keywords: Wage Returns; Skills; On-The-Job Training; General Human Capital; Firm-Specific Human Capital (search for similar items in EconPapers)
JEL-codes: J20 J24 J26 J30 O33 (search for similar items in EconPapers)
Date: 2019-08-02
New Economics Papers: this item is included in nep-hrm and nep-lma
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