WAGE DIFFERENTIALS IN THE JAPANESE MANUFACTURING SECTOR 1

Abstract

at a given time may be attributed to some combination of the following factors: age, sex, education and training, industry, occupation, workstatus (permanent or temporary), region, degree of unionization, and scale of firm (defined in terms of its number of employees). Until fairly recently, this last factor has received little attention in analyses of wage differentials; however, the evidence suggests that it has been extremely important in Japan. For not only have interscale manufacturing wage differentials been much greater in Japan than in certain western industrialized countries (Broadbridge, 1966, p. 51), but more importantly, such differentials remain when the data are disaggregated by industry and occupation. Indeed, evidence suggests (? 1.1 below) that there has existed in Japan the extreme case where male workers of the same occupation and age employed within the same industry received different wages depending on the scale of firm in which they were employed. Various hypotheses have been advanced in the literature to explain the evolution of IMWD; these include :3 1. 'Imported technologies'-Larger firms had to pay higher wages to build up the skilled modern industrial labour force required for the implementation of the modern technologies which they imported. 2. 'Capital intensity'-Interscale differences in the cost and availability of capital and/or interscale differences in technological constraints led to interscale differences in capital-labour ratios and so to interscale productivity differentials; a further hypothesis is then added (usually 4a (i)