Are Workers with a Doctoral Degree Facing an Unfavorable Labor Market Situation? —Observations from the Employment Status Survey (2022) —

Over the last decade, there has been increasing emphasis on the decline in Japan's research capacity, with a fall in the number of students who advance to doctoral courses cited as a factor (National Institute of Science and Technology Policy, 2023). Meanwhile, over the past several years, the government’s Basic Policies for Economic and Fiscal Management and Reform have mentioned plans to nurture and support research talent with doctoral expertise. In particular, the 2023 Basic Policies for Economic and Fiscal Reform stated that in order to realize an environment that encourages competent young people to aspire for a doctoral degree, the government will strengthen support measures, such as: improving the treatment of students in doctoral courses; securing an environment in which the students can dedicate themselves to challenging research programs; and developing career paths that enable workers with a doctoral degree to achieve success in a broad range of fields, including in industrial sectors. The fact that the government is promoting those initiatives implies that workers with a doctoral degree are facing an unfavorable labor market situation, but what is the reality?

Research on Wages for Workers with High Academic Achievement

In the United States and Europe, several empirical studies have been conducted with respect to wages for workers with a doctoral degree (e.g., Jaeger and Page, 1996; Walker and Zhu, 2011; Engbom and Moser, 2017). Those studies have shown that the wage level for workers with a doctoral degree is higher than that for workers with a master’s degree. For example, Engbom and Moser (2017), who looked at the situation in the United States, found that the wage level for workers with a doctoral degree is 47% higher than that for workers with a master’s degree.

In Japan in recent years, there have been several studies that compared the labor market outcomes for workers who graduated from graduate school and workers who graduated from undergraduate programs (e.g. Morikawa, 2015; Yasui, 2019; Suga, 2020). According to those studies, workers who graduated from graduate school earn 20% to 30% more than workers who graduated from undergraduate programs (graduate school premium) after controlling for individuals’ characteristics, and the employment rate is also higher for workers who graduated from graduate school. As a result, the rate of return from investments associated with advancement to graduate school— represented by the total sum of tuition fees and lost income during school—is fairly high, ranging from around 10% to 20%. However, there are significant limitations to those studies in that no distinction was made between workers with a master’s degree and workers with a doctoral degree due to data limitation.

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