Sheepskin Effects in Japan

Using data for the 1990’s, this paper examines the role of sheepskin effects in the returns to education for Japan. Our estimation results indicate that sheepskin effects explain about 50% of the total returns to schooling. We further find that sheepskin effect are only important for workers in small firms with the size of these effects being similar to comparable estimates for the US. Finally, the estimated sheepskin effects are decreasing with firm tenure, in particular for small firms. These results could be explained by the particular recruitment system of large firms in Japan, which makes university diploma as a screening device unimportant for large firms.Returns to Education, Sheepskin Effects, Japan

Home-ownership as a social norm and positional good: subjective well-being evidence from panel data

Much attention has been devoted to examining the absolute benefits of home-ownership (e.g. security and autonomy). This paper by contrast is concerned with conceptualising and testing the relative benefits of homeownership; those benefits that depend on an individual’s status in society. Home-ownership has previously been analysed as a social norm, implying that the relative benefits (costs) associated with being an owner (renter) are positively related to relevant others’ home-ownership values. The theoretical contribution of this paper is to additionally conceptualise home-ownership as a positional good, implying that the status of both home-owners and renters is negatively related to relevant others’ home-ownership consumption. The empirical contribution of this paper is to quantitatively test for these relative benefits in terms of subjective well-being. We run fixed effects regressions on three waves of the British Household Panel Study. We find that i) a strengthening of relevant others’ home-ownership values is associated with increases (decreases) in the subjective well-being of home-owners (renters), and ii) an increase in relevant others’ home-ownership consumption decreases the life satisfaction of owners but has no effect for renters. Overall our findings suggest that i) the relative benefit of home-ownership are both statistically significant and of a meaningful magnitude, and ii) homeownership is likely to be both a social norm and a positional good. Without explicitly recognising these relative benefits, policymakers risk overestimating the contribution of home-ownership to societal well-being