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Home > Research and Studies > Bank of Japan Working Paper Series, Review Series, and Research Laboratory Series > Bank of Japan Working Paper Series 2019 > (Research Paper) Decreasing Wage Returns to Human Capital
August 2, 2019
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.
J20; J24; J26; J30; O33
Wage Returns; Skills; On-The-Job Training; General Human Capital; Firm-Specific Human Capital
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