Testing the dual structure of the Japanese labor market

This chapter empirically investigates the dual structure of the Japanese labor market by considering employment status as an expression of duality. The data are obtained from a series of micro surveys on employment, conducted in the Tokyo metropolitan area during 2002–2014. The first half of this chapter focuses on empirical arguments about the contrasting properties of wage profiles between regular and non-regular workers, and the flattening of wage profiles of the former. The second half examines the employment status sluggishness, which is defined by the effect of the employment status of the previous job on the current one. In addition, we examine the possibility that the probabilities of a worker’s allocation to a certain sector are determined at their time of entry into the labor market. These so-called first-job effects are defined by the effect of the employment status of the initial job on the current one. The estimated results reveal several facts regarding the new phase of the Japanese dual labor market. (1) While regular workers’ wages rise with years of tenure and external experience, only the latter influences non-regular workers’ wages. (2) The wage increases based on experience are of a similar magnitude across employment statuses, except for female regular workers; firm-size and educational-background premiums exist only in the regular workers’ wages. (3) The slopes of regular workers’ wage-tenure profiles have remained stable for more than 10 years since the early 2000s. (4) The quantitative impact of the first-job effects is not very substantial. The serially dependent structure of employment status has a greater influence on the rising labor market segmentation.