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Why has wage inequality evolved so differently between Japan and the US? The role of the supply of college-educated workers
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, Hitotsubashi University, Japan ; , Ryutsu Keizai University, Japan

Economics of Education Review Volume 52, Number 1, ISSN 0272-7757 Publisher: Elsevier Ltd

Abstract

Why has wage inequality not changed in Japan while it has secularly increased in the US over the last few decades? Pointing to the difference in the trends of the college wage premium in the two countries as a proximate cause, this study assesses the importance of the supply factor as a determinant of the college wage premium. The wage differential between college and high-school graduates decreased slightly from 0.35 to 0.34 log point in Japan, while it increased from 0.43 to 0.65 log point in the US between 1986 and 2008. During this period, the number of college graduates grew twice as fast in Japan as in the US. Estimations of labor demands for different educational backgrounds and simulations based on counterfactual supply trends reveal that the more rapid increase of college graduates in Japan than in the US explains about 60% of these contrasting trends. The difference in post-war fertility trends largely explains the difference in the supply increase of college graduates between the two countries.

Citation

Kawaguchi, D. & Mori, Y. (2016). Why has wage inequality evolved so differently between Japan and the US? The role of the supply of college-educated workers. Economics of Education Review, 52(1), 29-50. Elsevier Ltd. Retrieved March 22, 2023 from .

This record was imported from Economics of Education Review on March 1, 2019. Economics of Education Review is a publication of Elsevier.

Full text is availabe on Science Direct: http://dx.doi.org/10.1016/j.econedurev.2016.01.002

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