On the Factor of Bankruptcy of Japanese Third Sector

This study is the first comprehensive empirical assessment on wage determinants of child care workers in Japan. In particular, this paper focuses on the sectoral wage differentials among publicly owned and licensed private facilities and the wage-age profile among different types of management. To address these topics, we take advantage of a unique, large, and high-quality employer-employee matched survey data set on child care workers collected in the summer 2002. We present four major empirical findings. First, we found adjusted hourly waged are higher at public centers by 19.3 percentage points (355 yen in real value) compared to the private centers. Second, regular workers who are male, older, more experienced, and who have higher degrees of education and qualifications tend to have higher wages, while a similar profile is not significantly correlated with non-regular workers' wage rates. Thus, we can conclude that the age and experience wage profile for regular workers in the child care market strongly reflects the seniority system in Japan. At the same time, differences in the wage-age profile could not be attributed wholly to differences in types of management. Third, the rates of increases in return for workers' human capitals are diminishing much faster in private centers than the ones in public facilities. The magnitudes of diminishing rates in the public sector are negligible, while the diminishing rates in private facilities are not insignificant. Finally, employment status also has a large effect on the wage profile. Both regular and non-regular employees with long hours of work enjoy enormously higher wages than non-regular workers with shorter work hours. The result might be partially accounted for by the implications of human capital such that they are valued for regular workers, but not appreciated for non-regular workers in the labor market. We conclude that much higher wage levels and steeper age-wage profile in public centers cannot be justified unless such high costs are closely related with higher quality of care in the public sector. That might not be the case, however, since we observe smaller differences in the age profile for non-regular workers in both sectors.