The Effect of Implicit Contracts on the Wages: Evidence from Japanese Labor Market

This paper tests whether wages in Japanese Labor market are determined by current labor market condition or by past labor market conditions. following Beaudry and DiNardo (1991) which analyze U.S males. In contrast to previous findings for Canada and the U.S., implicit contract models with costless mobility are rejected for the Japanese labor market. Implicit contract models with costly mobility describe the Japanese labor market better than models with costless mobility and spot market models.