Schooling and earnings profiles

In this chapter, we discuss the influence of pre-work education on subsequent earnings patterns within the Japanese enterprise. As discussed in section 2.4, the standard way of examining this is to study the relative positions and shapes of so-called earnings–experience profiles. These plot the log of earnings against years of experience of individual workers in given jobs. Much of our empirical discussion will centre on workers who graduated from each of the four main levels in the Japanese school system: these are (i) primary or junior high school (6–7 years of schooling), (ii) senior high school (12–13 years), (iii) junior college (14–15 years), and (iv) university (over 16 years).

Two relationships between schooling in Japan and subsequent labour market experience are relatively well established. First, the level of pre-work educational attainment is positively related to the level of wage-earnings (Hashimoto and Raisian, 1985). Recall that wage-earnings in a Japanese context refer to regular monthly earnings plus a (typically) biannual bonus payment. Secondly, and particularly in the context of the lifetime employment system, higher-level educational qualifications appear to signal suitable career paths within the firm rather than to provide directly usable vocational skills (see Organisation for Economic Co-operation and Development, 1993). As stated by Dore and Sako (1989):

Recruitment is for a career, not for a job.