Career Experience Replaced: Emergence of Japanese Internal Labor Markets
Abstract: Contemporary Japanese firms provide an example of the “ports of entry” policy. However, this microanalysis of a steel company in the 1930s– 1960s shows that 1) the return on tenure and schooling surged from the late 1940s, 2) the return on on previous careers decreased from the late 1940s, indicating that extended schooling replaced mid-career experience, but 3) mid-career recruiting was active by the 1960s. These suggest that the Japanese model, which rewards tenure, was not an intended incentive design to induce firm-specific skill acquisition, but results of technological changes and the educational reform, of which firms became aware later.
