Cohort Size Effects on Promotion and Pay: Evidence from personnel data

Author Name ARAKI Shota  (Hitotsubashi University) /KATO Takao  (Colgate University) /KAWAGUCHI Daiji  (Faculty Fellow, RIETI) /OWAN Hideo  (Faculty Fellow, RIETI)
Creation Date/NO. April 2013 13-E-029
Research Project Economic Analysis of Human Resource Allocation Mechanisms Within the Firm: Insider econometrics using HR data
Download / Links
Notes Revised: December 2013


This paper provides econometric evidence on the cohort size effect in promotion and pay using detailed personnel records of all workers who joined two large manufacturers in Japan during the period 1991-2010. We find that entering the labor market when the economy is in a bad year and joining firms with fewer colleagues increase the probability of promotion and pay. Our finding implies that the cohort can be a reasonable proxy for the contestant pool.