Extended Schooling and Internalized Training: Skill Elements Evolution of Blue-collar Workers in an Internal Labor Market

Long-term employment and internal promotion at major firms are common in developed economies. We examine the long-range changes in the returns on skill elements and training using a micro dataset of a Japanese ironworks. We show that, 1) the return on schooling rose from the late 1940s and that on tenure surged but that on previous experience became modest from the mid-1950s, 2) complementarity between schooling and experience strengthened from the mid-1950s, and 3) training programs focused on bettereducated employees from the late 1940s, which formed an internal labor market in the flexible labor market in the 1960s.