Friday, October 1, 2010

Starting salaries in Japan

Yomiuri Shimbun reports a survey of 496 companies on starting salaries, which for new college graduates averages ¥207,445 per month [not including the normal 4-odd months of bonus]. Two-year college grads start at ¥173,828; high school grads at ¥162,749. All three are essentially unchanged from the past year.

Now think of the normal opportunity cost calculation: how much is an extra year of schooling worth, relative to the pay you get? Jobs of course aren't identical, and neither are subsequent pay profiles. But if you have get-up-and-go, what decision would you make? Any implications for how you'd approach your educational choice? -- more later on what has in fact happened over the past 25 years. Or try to look it up yourself—data are not hard to find.

This snippet (maybe it shouldn't be called a "story") does not give information on variance; take my word that it is low. (Hunt and you'll likely find a breakdown of these 400-odd firms by industry.) Some offer a bit more than average, some a bit less, but no one is 50% above average. To my knowledge, this lack of variance continues to be the case until the first real promotion, typically around age 30.


stusekj11 said...

The difference in long-term earnings do not suggest much variance. It would seem that the difference between the college graduate's and the high school graduate's respective salaries could be made up and possibly even exceeded by the latter because seniority pay often outweighs pay based on education. If this is the case, it would have a negative impact on the economy as younger generations would more often opt out of further education and go straight into the labor force.

Mike Smitka said...

A negative effect, if those who enter the LF straight out of HS out-earn those who don't? However I don't provide data here on what the average wage differential is (say) 10 years out.
But look in particular at junior (2-year) colleges: what does that suggest?

Sean Doyle said...

The difference between workers straight out of high school and junior college graduates is dwarfed by the spread between those two and college graduates. It suggests that the opportunity cost is much higher for the first two years of college. For this reason, junior college does not seem like a good investment, and you should only go to college if you plan to go for four years.