College Premium Trajectories over the Life Course in Japan

Previous research has highlighted the heterogeneity of returns to college education among people from different socioeconomic backgrounds. This study advances upon prior efforts by examining long-term socioeconomic trajectories over individuals' life course rather than focusing solely on a single point in time. We investigate whether college premium trajectories (that is, the difference in socio-economic returns between college graduates and high school graduates) widen, remain constant or shrink over the life course and whether trajectories are further differentiated by social backgrounds. We use data from the Japanese Life Course Panel Surveys, nationally representative surveys conducted annually in Japan since 2007. The outcome variable is annual income, the treatment variable is respondents’ education (college graduates vs high school graduates), the effect modifier variable is parental education (if one of the parents attended higher education), and a range of pretreatment covariates are controlled for. The results from our analyses show the followings: Among men, the college premium increases across the life course and the income gap widens with age even after adjusting for covariates. However, among women, the college premium remains stable across life course. With regard to the heterogeneity in the college premium by parental education, among men, the college premium becomes larger with age especially when parents have higher education. However, among women, the college premium persists over time and does not differ by parental education. Among men, it is possible that college graduates benefit more from Japanese employment practices (internal promotion, internal training, and OJT) than high school graduates, resulting in a widening college premium with age. Similarly, men from advantaged backgrounds are more skillful in converting college education into the benefits of Japanese employment practices than from those from disadvantaged backgrounds, resulting in a widening college premium with age between people from different backgrounds.