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Abstract

Vol. 54, No. 3, pp. 264-285 (2003)

“Pay Structures and the Transformation of Japanese Firms -An Empirical Analysis of Performance and Pay Using Personnel Data-”
Tsuyoshi Tsuru (Institute of Economic Research, Hitotsubashi University), Masahiro Abe (Faculty of Economics, Dokkyo University), Katsuyuki Kubo (School of Commerce, Waseda University)

It is often argued that pay structures in many large Japanese firms have become more performance-oriented recently. We analyzed the determinants of individual employees' wages using data sets provided by company personnel departments. These data sets contain detailed information of individual workers' salaries, performance ratings, and characteristics such as education and tenure. It is shown that while there is a strong positive relation ship between experience and wages, a larger proportion of variation of wages can be explained by ability grade levels(shokuno shikaku tokyu). Our results also indicate that the correlation between salary and performance ratings has become stronger while the correlation between salary and experience has become smaller in the firms we analyzed, particularly in firms that have changed their wage policies.