Sheepskin Effects in Japan
25 Pages Posted: 25 Nov 2002
Date Written: July 2003
Using data for the 1990's, this paper examines the role of sheepskin effects in the returns to education for Japan. Our estimation results indicate that sheepskin effects explain about 50% of the total returns to schooling. We further ﬁnd that sheepskin effect are only important for workers in small firms with the size of these effects being similar to comparable estimates for the US. Finally, the estimated sheepskin effects are decreasing with ﬁrm tenure, in particular for small ﬁrms. These results could be explained by the particular recruitment system of large ﬁrms in Japan, which makes university diploma as a screening device unimportant for large ﬁrms.
Keywords: Returns to Education, Sheepskin Effects, Japan
JEL Classification: J31, J24, I21
Suggested Citation: Suggested Citation