In this paper, we analyze the negative impacts of overeducation on wages in the Japanese youth labor market. In addition, this study assesses empirically the validity of the Human Capital Theory and Job Competition Model within the context of overeducation and undereducation. Our study uses the data set of a web monitoring survey targeting Japanese youth aged 17 to 27; the survey was conducted in January 2012 by the Economic and Social Research Institute, Cabinet Office. The increasing trend of youth to enroll for longer educational courses and the relative scarcity of suitable job opportunities later results in overeducation. Overeducation is the mismatch that an individual has higher qualifications than required for their current jobs. This phenomenon leads to various negative outcomes. As expected, there is a negative relationship between overeducation and wages. Overeducated workers earn significantly lesser than their correctly placed colleagues, after controlling for ability and other potential bias. The occupational structure of the Japanese youth labor market lacks the capacity to absorb the rising number of educated workers into traditional occupations. Conversely, undereducated employees earn more than youth in jobs exactly matched to their qualifications. In terms of a theoretical framework, our findings imply that the Human Capital Theory is not valid within the context of overeducation and undereducation in the Japanese youth labor market.
Most preceding studies on human resource management of non-regular employees have focused on comparing them with regular employees and did not consider the diversity of non-regular employees. However, from the current state of diversification of employee category and the fact that more than one employee category is set under the non-regular employee category, understanding the reality of the application and the personnel management of non-regular employees becomes difficult in the companies using a conventional framework of two divisions: regular and non-regular employees. Furthermore, from the view of balanced treatment of employee categories, the complication of a company's human resource portfolio (HR portfolio) through diversification of non-regular employee leads to a problem of balanced treatment between different categories of non-regular employees. This new diversity increases the necessity of personnel management to consider the various non-regular employees' categories equally.
Therefore, using micro data from an original survey, this study examines two points: (1) the conditions of employment and application of three different groups of non-regular employees: contract, part-time, and shokutaku employees (temporary employees hired after retiring from regular employment) and ( 2) the influence of the HR portfolio ( the employment ratio and job level) of non-regular employees on personnel management of non-regular employees.
My analysis provides the following results. First, the evaluation and treatment of all nonregular employees tend to conform nearly to that of regular employees when the employment ratio of contract employees or part-time employees is high compared with that of the other nonregular employee groups in the same company. This suggests that when the employment ratio of a particular non-regular employee increases, the company begins to development the evaluation and treatment systems for that group. Consequently, to secure fairness between a particular non-regular employee group and the other non-regular employee groups, we see progress in the development of evaluation and treatment systems for the entire group of non-regular employees.
Second, in companies where shokutaku takes charge of higher-level jobs, there is less development of evaluation and treatment systems for all non-regular groups. Even when contract, part-time, and shokutaku employees are in the non-regular employee category, companies treat each of them differently in personnel management. Therefore, we do not see the ripple effect in shokutaku mentioned above.
Third, the development of education and training system for the non-regular employees does not influence the HR portfolio of non-regular employees. Education and training is indispensable to make the best use of employees in a company. Even if the content is different from regular employees, a high possibility exists that education and training for non-regular employees is beneficial and will be executed by companies.
Fourth, when the division of jobs between contract and part-time employees is ambiguous, a company tends to consider the development of evaluation and treatment systems for them. In contrast, when the division of jobs is clear, a company does not consider the development of evaluation and treatment systems. When a contract employee's job level and the division of jobs advance compared with that of the part-time employee, a company makes different personnel management choices for each of them, and a contract employee will be managed separately from a part-time employee.
Dual system of vocational education and training in Germany has been undergoing periodic revisions to meet new requirements in a changing environment and it still maintains a pivotal position in German labor market. However, those reforms to reflect the changes in technology and industry structure have caused dualization and diversification of training occupations, resulting in the co-existence of those requiring more abstract knowledge and theories and those primarily requiring OJT. In the former, dual system now competes with higher education such as universities in order to secure highly capable young people. Low birth rate and globalization of education and labor markets have also increased the interest of German youth in higher education. To cope with this situation, German firms have invented new training options in order to attract highly capable youth, who have graduated from gymnasium with very good scores. For example, dual study program (DSP) is a hybrid system which offers apprentices opportunities of participation in firmbased OJT and higher education at the same time, while receiving training allowances. Since both initial vocational qualification and bachelor degree can be obtained on fast track, DSP is rapidly gaining popularity. More training options are now available for highly capable German youth, while it is becoming more difficult for graduate from hauptschule, a major supplier of apprentices in the past, to receive training positions that lead to good income. In addition, active updating and sophistication of existing occupations have been accompanied by a side effect of crowding out small companies from dual system due to increased costs. Similarly, DSPs are offered almost exclusively by large firms. Thus, within German vocational education and training, disparities among firms as well as among apprentices are now becoming more salient. When we look at another important institution of collective bargaining, coverage ratio of industry based agreements have now substantially fallen. Segmentalization or dualization of collective bargaining and vocational education and training are observed simultaneously.