Education and the Dual Labor Market for Japanese Men

Descriptive accounts of the Japanese educational system often refer to the intense competition that characterizes college entrance examinations. This competition reflects the high degree of segmentation in the Japanese labor market; in Japan, the labor market sector in which one secures his or her first job has a major impact on socioeconomic opportunities throughout the entire work career. We analyze data on Japanese men entering the labor market from 1954 through 1975. Education is the major determinant of the sector of one's first job, but our results suggest that this effect primarily derives from the relative ranking of educational attainment within one's job-market cohort. Our findings support a job-competition queuing model in which education serves as a screening device that rations employment in the primary sector.