Changes in the Structure of Wages: the U.S. Versus Japan

50 Pages Posted: 21 Dec 2000

See all articles by Lawrence F. Katz

Lawrence F. Katz

Harvard University - Department of Economics; National Bureau of Economic Research (NBER)

Ana Revenga

The World Bank

Date Written: July 1989

Abstract

This paper examines changes in wage differentials by educational attainment and experience in the US. and Japan since the early 1970s. While educational earnings differentials have expanded dramatically in the U.S. in the 1980s, the college wage premium has increased only slightly in Japan. In contrast to the large expansion in experience differentials for high school males in the U.S., the wages of male new entrants have risen relative to more experienced workers for both high school and college graduates in Japan from 1979 to 1987. Macroeconomic factors (increased openness, trade deficits, and labor market slack) and changes in institutional structures (the decline in unionization) are likely to have amplified each other in contributing to an unprecedented decline in real and relative earnings of young less-skilled - males in the U.S. in the 1980s. We further find that a sharp deceleration in the rate of growth of college graduates as a fraction of the labor force in the U.S. helps account for the much larger increase in the college wage premium in the U.S. than in Japan in the 1980s.

Suggested Citation

Katz, Lawrence F. and Revenga, Ana, Changes in the Structure of Wages: the U.S. Versus Japan (July 1989). NBER Working Paper No. w3021, Available at SSRN: https://ssrn.com/abstract=249502

Lawrence F. Katz (Contact Author)

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Ana Revenga

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