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Schooling, employer learning, and the internal labor market effect: wage dynamics and human capital investment in the Japanese steel industry, the 1930-1960s

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  • N35 - Asia Including Middle East
  • J31 - Wage Level And Structure
  • Wage Differentials
  • J24 - Human Capital
  • Skills
  • Occupational Choice
  • Labor Productivity
  • Economics
  • Education


The impact of schooling on wages decreases as employers learn about workers’ abilities from their experience. While this employer learning often proceeds asymmetrically between incumbent and entrant employers, large firms’ internal labor markets could satisfy the statistical assumption of the public learning model. This research utilizes such semipublic properties and shows that (1) employer learning is not observed for experience before gaining long-term employment, being dominated by complementarity between schooling experience, and (2) the employer learning effect dominates the complementarity effect after gaining long-term employment; the internal labor market affects workers’ human capital investment and asymmetrically facilitates employer learning.

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