Wage distribution in Japan, 1989–2003

Abstract. This study examines the recent trend of the Japanese wage distribution based on a micro‐level data set from the Basic Survey on Wage Structure (1989–2003). We perform several decomposition analyses of changes in the distribution of the hourly wage. We observe that lower returns to education and years of tenure contribute to a diminishing income disparity between groups for both sexes. A larger variance within a group contributes to the wage disparity for males, while an increased heterogeneity of workers' attributes contributes to the wage disparity for females. The Dinardo, Fortin, and Lemieux decomposition confirms the basic findings with a parametric variance decomposition.