| Author Name | Toshiaki Tachibanaki / Masato Hisatake |
|---|---|
| Creation Date/NO. | April 1998 98-DOF-28 |
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Abstract
Few of the empirical studies concerning Japan's seniority-based wage structure have fully analyzed it from a microeconomics viewpoint, i.e., by examining the differences between industries, companies, and so forth. But it is the companies themselves that determine their wage scales, after considering factors such as business performance, business prospects, and management policy. It should also be noted that Japanese firms attempt to keep their wages in line with the wages of other companies in the same industry.
In this paper the authors analyze Japanese wage structures by industry, using a data set on individuals collected for the Basic Survey on Wage Structure. Specifically, for the four survey years of 1979, 1984, 1989, and 1994, we calculated wage functions and coefficients by industry and occupation and analyzed chronological changes in the data. The results are summarized in the following.
In the manufacturing sector, changes in the seniority-based wage structure differed considerably by industry. In general, the relative importance of seniority for blue-collar workers tended to decline while it remained about even for white-collar workers.
Our analysis of white-collar workers in all industries, including nonmanufacturing industries, revealed that the seniority-based wage structure was declining in the banking and insurance industries. In other industries, however, it was basically being maintained up to 1994.
One reason for the varying pace of change in wage structures among industries is growth potential. Our empirical analysis shows that the higher an industry's prospective growth rate, the greater degree to which the pay scale tended to remain seniority-based.
Another reason could be the differences in average wage levels between industries. We found, for example, that the higher the average wage of an industry, the less seniority-based its wage structure tended to be.
This clearly shows that the Japanese seniority-based wage structure has undergone some changes in recent years and the changes were clearly affected by industry type and occupation.
