The effect of discrimination and of industry segmentation on Japanese wage differentials in relation to education

The paper investigates Japanese wage differentials based on the concept of industrial division. The labor market is examined for two sectors separately, namely competitive sectors and non-competitive sectors. The effects of female-male difference, of human capital, and of occupation also are examined, and the cost of discrimination is estimated. By applying several quantitative methods, it was found that worker characteristics such as education, length of service and age were treated differently by sector, sex and occupation. Also, wage differentials by sex were mostly rooted in differential treatment of worker characteristics, while wage differentials by sector were explained largely by firm size component. The above general results, however, are greatly modified by workers' occupations and industrial divisions.