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October 1984, Vol. 107, No. 10
the case of Japan
In a review of industrial relations research conducted during the 1970's, James G. Scoville writes that, in both Japan and the United States, size-of-firm wage differentials are explained by differences in employees' human capital.1 However, two recent studies suggest that human capital differences do not completely explain the differentials in this country. Using data for 1979, Wesley Mellow found that wages in firms of 1,000 or more workers were 8 percent greater than those in firms with fewer than 25 workers when a number of factors, including education and experience, were held constant.2 Martin E. Personick and Carl B. Barsky, who studied pay at various experience and responsibility levels of professional, technical, and clerical occupations, reported size-of-firm differentials for all but 1 of 25 job levels. Typically, these were only for the largest corporations (more than 10,000 employees), where differentials were 10 to 15 percent for professional and 20 percent for clerical and technical occupations over pay in firms with 500 or fewer employees3
If elements of human capital do not completely explain size-of-firm differentials in the United States, is Japan a similar case? This article explores that issue, and suggests an answer based on data from the Chingin Kozo Kihon Tokei Chosa [Wage Structure Survey].4
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1 James G. Scoville, "A Review of International and comparative Research in the 1970's," in Thomas A. Kochan, Daniel J.B. Mitchell, and Lee Dyer, eds., Industrial Relations Research in the 1970's: Review and appraisal (Madison, Wis., Industrial Relations Research Association, 1982), p. 25.
2 Wesley Mellow, "Employer Size and Wages," Review of Economics and Statistics, August 1982, pp. 495-501.>
3 Martin E. Personick and Carl B. Barsky, "White-collar pay levels linked to corporate work force size," Monthly Labor Review, 1982, pp. 24-26.
4 Published since 1954 and annually since 1964 by the Japanese Ministry of Labor.
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