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The Effect of Employer Tenure on Wages in Japan

Ayaka Nakamura
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Ayaka Nakamura: PhD. Student, Graduate School of Economics, Osaka University

No 19E007, OSIPP Discussion Paper from Osaka School of International Public Policy, Osaka University

Abstract: We estimate the effects of employer tenure on wages based on the instrumental variable method and by using the Japan Household Panel Survey (JHPS/KHPS) from 2004 to 2014. We cannot reject the hypothesis that employer tenure significantly contributes to the wage growth after correcting for the omitted variable biases due to individuals' unobserved abilities and unobserved matching qualities, while the ordinary least squares estimators imply substantial returns to employer tenure. These results are robust across subsamples and do not depend on the estimation method. We conclude that the return to employer tenure may be less important in Japan than has been specified in previous studies.

Keywords: Human capital; Matching (search for similar items in EconPapers)
JEL-codes: J24 J31 R23 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lma
Date: 2019-05
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