Abstract
The aim of this paper is to scrutinize Saskia Sassen's theory as presented in her famous work The Global City, regarding the relationship between industry, occupation structure, and wage inequality, and then to verify the validity of her hypothesis in the case of prefectures in Japan. According to this hypothesis, as an effect of globalization, industries such as professional services, IT and banking (PSITB) grow while the secondary industries related to the middle class decline. Furthermore, both upper (managers and professionals) and lower (sales and services) service occupations grow, and this consequently increases the wage inequality. Applying this hypothesis would imply also that Tokyo, compared to other prefectures, is more de-industrialized because the share of both lower and upper service occupations is higher, and hence, wage inequality is also higher. Using census data and Basic Survey on Wage Structure, we have tested the applicability of this hypothesis.
The results show that (1) in Tokyo, the share of PSITB industries is indeed high; however, the share of the secondary industries is also high; (2) in the prefectures where the share of secondary industries is low and PSITB industries is high, the share of both upper and lower service occupations is high; (3) although the wage inequality is higher in the prefectures where the share of lower service occupations is higher, the trend is the opposite in the prefectures with a high share of upper service occupations. Moreover, the effect of the global city on the occupation structure and wage inequality was insignificant.
Although some results partially support Sassen's hypothesis, the majority contradict it, and the overall results do not support her claim on the negative effect of global cities on wage inequality.
