Postgraduate Education, Labor Participation, and Wages: An empirical analysis using micro data from Japan

Author Name MORIKAWA Masayuki  (Vice Chairman & Vice President, RIETI)
Creation Date/NO. June 2013 13-J-046
Research Project Analysis on Service Industries: Productivity, Economic Welfare, and Policy Evaluation
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Human capital is a fundamental determinant of long-run economic growth. This paper, using micro data from the Employment Status Survey in 2007, analyzes the effects of postgraduate education on labor participation and wages. According to the analysis, 1) the employment-population rates of females and elderly people with a postgraduate education is higher than those with an undergraduate education. The negative effect of marriage and spouse's income on labor participation is small for postgraduate females. 2) The relative poverty rate is lower for people with a postgraduate education. 3) The wage premium for postgraduates relative to undergraduates is about 30%, but is small for public sector workers and large for the self-employed. 4) The postgraduate wage premium is similar in magnitude for male and female workers. 5) The wage reduction after age 60 is smaller for workers with a postgraduate education. 6) The private rate of return to postgraduate education exceeds 10%. Under the trend toward advanced technology and the growing demand for human capital, postgraduate education is becoming important to vitalize the Japanese economy. At the same time, expansion of postgraduate education may contribute to increasing the labor participation of females and elderly people.

The English version of this paper is 13-E-065.