FONDATION FRANCE-JAPON DE L’EHESSFFJ DISCUSSION PAPER #19-02

Legitimation of Income Inequality in Japan:
A Comparison with South Korea
and the United States
Shin Arita(Institute of Social Science, University of Tokyo)

Kikuko Nagayoshi(Tohoku University)

Hirofumi Taki
(Hosei University)

Hiroshi Kanbayashi(Tohoku Gakuin University)

Hirohisa Takenoshita(Keio University)

Takashi Yoshida(Shizuoka University)

June 20192019 FFJ/SASE Best Paper Award on Asia
Fondation France-Japon de l’EHESS (FFJ)54, boulevard Raspail 75006 Paris - ffj@ehess.fr

Legitimation of Income Inequality in Japan:
A Comparison with South Korea and the United States
Shin Arita, Kikuko Nagayoshi, Hirofumi Taki, Hiroshi Kanbayashi,
Hirohisa Takenoshita, Takashi Yoshida
Abstract
Why does Japan have a large earnings gap between regular and non-regular employment?
We attempt to answer this question through the lens of the legitimation of inequality, assuming
the possibility that the inequality remains unresolved because it is legitimized due toinstitutional settings in Japanese society. In this paper, we explore to what extent the inequality
is legitimized, as well as how it is legitimized, in Japanese society by analyzing data collectedfrom a comparative vignette survey on the just income of fictitious workers in comparison with
South Korea and the United States. The results of multilevel model analysis show that theincome gap between regular and non-regular employees is accepted as just in Japan andSouth Korea. Moreover, non-regular worker respondents think that the income gap should be
wider than regular worker respondents do (against their own interests) only in Japan. To someextent, the acceptance of income inequality and its over-acceptance by non-regular workers
can be explained by the assumed difference in the duties and opportunities in the workplace
between regular and non-regular employees, which is brought about by the male breadwinnermodel and Japanese firms’ practices to secure the livelihood of employees and their families.
Based on the results, we argue that the income inequality between regular and non-regular
employment in Japan has a stronger logic of legitimation and, therefore, is more likely topersist than in other countries.

Keywords
Non-regular employment, Just income, Fairness, Factorial vignette survey, Employment
systems

Acknowledgements
This paper was submitted to the Research Network Q “Asian Capitalisms” of the 2019
SASE annual conference in New York and won the 2019 FFJ/SASE Award for the Best Paper
on Asia. This research was supported by JSPS KAKENHI Grant Number JP16H03688.
Refering author: Shin ARITA (Institute of Social Science, University of Tokyo, 7-3-1
Hongo, Bunkyo-ku Tokyo JAPAN - E-mail: sarita@iss.u-tokyo.ac.jp)

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FFJ DISCUSSION PAPER #19-02

FFJ Discussion Paper Series #19-02
June 2019

1.

Introduction

p. 4

2.
Employment systems and non-regular employees from a comparative
perspective
p. 5
2.1. Non-regular employees under the Japanese employment system

p. 5

2.2. Legitimation of rewards inequality in different institutional settings

p. 6

3.

Just income analysis based on factorial vignette survey data 

p. 8

4.

Data and methods

p. 9

5.

4.1. Data

p. 9

4.2. Methods 

p. 10

Results

p. 11

5.1. Main effects of vignette attributes

p. 11

5.2. Interaction effects between the vignette and respondent’s attributes p. 13
5.3. Assumed differences between regular and non-regular workers

p. 13

5.4. Changes in effects by adding variables on respondents’ assumptions p. 15
6.

Conclusion and discussion

p. 18

7.

References

p. 21

3

FFJ DISCUSSION PAPER #19-02

Contents

Introduction
Japan has witnessed the exacerbation of socioeconomic inequality over the last few

decades, despite a long-held belief that Japan was a relatively egalitarian society. Particularly,
the earnings inequality between regular workers and non-regular workers, such as part-time,
contract, and dispatched workers, is quite large compared to that of other counties1 (OECD,
2017; Takahashi, 2018).
As we will see later, Japanese non-regular employment is characterized not only by
precariousness in terms of employment stability but also as work meant for supplementary
earners of households, which is brought about by the male breadwinner model and Japanesefirms’ practice of providing “family-supportive rewards” to the head of household. Under thispractice on the basis of need,2 there has emerged a distinction between regular employees
who can enjoy generous rewards to support their families and stable employment in exchange
for their full commitment to firms and non-regular employees who are exempted from certain
duties and responsibilities, such as overtime work and relocation, in exchange for accepting
low wages (Imai, 2011). As the distinction is highly correlated to separate gender roles inJapanese society, regular employees are mainly male, while non-regular employees aremainly female, particularly those who are married.
There is a possibility that the above feature attached to the distinction between regularand non-regular employment in Japan is a factor of the reproduction of the large income gap
between the two types of employment. Rewards inequalities can persist only when they areproperly legitimized in modern societies, which emphasize the value of equality (Costa-Lopes
et al., 2013). Based on this perspective, the income gap between regular and non-regular
employment can remain unresolved because it is legitimated by the assumed difference injob conditions, such as duties and responsibilities, to a greater extent in Japan than in othercountries. This may be one reason for the large income gap and its reproduction according to
the type of employment in Japan.
This vicious circle can be explained by the framework of reward expectation theory,
which assumes that shared beliefs about the specific status of individuals influence justiceevaluation (Auspurg et al., 2017). According to the reward expectation theory, nominal
characteristics that are not related to one’s ability or competence become associated withreward expectations based on certain shared beliefs through social interaction. If it occurs,even those who are in a disadvantageous position share the beliefs and thereby accept theinequality. Since social interaction is constrained by institutions, we can expect that different
institutions nurture different shared beliefs about the specific status of workers. The Japaneseemployment system might attach different shared beliefs regarding abilities or duties andresponsibilities to regular and non-regular workers, which legitimate and reproduce the income
gap.

1. All other factors being equal, the average income of full-time regular to full-time non-regular workers
is 92.7% in the U.S., while it is as low as 79.0% in Japan, according to our analysis of PIAAC data.
2. This practice of Japanese firms, however, is gradually weakening according to the globalization ofmanagement systems.

4

FFJ DISCUSSION PAPER #19-02

1.

just income of fictitious workers from a factorial survey that we conducted in Japan, South
Korea, and the United States. First, we explore the extent of the gap in just income between
regular and non-regular workers, as well as the gap according to gender and other attributesof workers. Next, we analyze whether even the disadvantaged, such as respondents who
are non-regular workers, accept the gap in just income and what explains the extent to whichpeople accept inequality in income. In doing so, we attempt to reveal how employment systems
shape and reproduce income inequality in Japan from a comparative perspective.

2. Employment systems and non-regular
employees from a comparative perspective
2.1.
Non-regular employees under the Japanese employment
systemIn Japan, firms, particularly large businesses, have supported employees’ families
by providing the head of the household with stable employment and seniority-based highwages. The provision of long-term employment and seniority earnings, which are importantcomponents of the Japanese management system, has functioned to secure the livelihood of
employees and their families in Japan, where an adequate social security system has not beendeveloped (Inagami and Whittaker, 2005; Nomura and Kimoto, 2002; Osawa, 2011). Suchlong-term employment until the mandatory retirement age enables stable family formation,
and wage increases based on their seniority can cover a family’s increasing cost of living as
children grow older (Ono, 1987).
Such generous rewards are not provided to all employees, but only to the “core”
employees of the firm who are assumed to be qualified for them. The distinction between regular
employees who work full-time with an indefinite-term contract and non-regular employees who
work part-time or with a fixed-term contract has been used to determine who is entitled to the“family-supportive rewards” provided by Japanese firms. As this distinction was formed basedon the male breadwinner model during the period of high economic growth that lasted until the
1980s, non-regular workers are mainly female, particularly those who are married, though thenumber of male non-regular workers has been increasing since the 1990s. Combined with thepractice of livelihood security provided by Japanese firms, the model has generated the notionthat females can be financially supported by their spouses who work as regular employees
and only need part-time or fixed-term jobs that are compatible with performing householdchores. As married female workers do not have a responsibility to financially support theirfamilies, it is considered sufficient for non-regular workers to earn only supplementary income
for their households (Osawa, 2011). This is the critical reasoning that legitimizes the large
wage gap between regular and non-regular employees in Japan.3
3. The family-supportive rewards are paid to employees not based on the actual necessity to support
their families, but on the type-of-employment categories, which match the actual necessity only when
the head of a household is a father who works full-time with an indefinite-term contract. Although suchdiscriminatory treatment of workers might be unfair, particularly for women who actually support theirfamilies, it could be accepted to the degree that females follow a “standard” life course, which assumes

5

FFJ DISCUSSION PAPER #19-02

In this paper, we examine whether such legitimation is evident by utilizing data on thein all respects. Reflecting the above logic, the distinction sometimes involves the differencein duties and responsibilities in the workplace. In Japan, it is difficult for employees to decline
an order to perform overtime work, which leads to long working hours. However, it is regular
employees who are expected to obey the order, while non-regular employees are basically
exempted from it (Hisamoto, 2010). This is also the case with orders for relocation and job
rotation, which are common practice in the Japanese personnel management system. The
difference in the expected duties and responsibilities tied to the distinction between regular andnon-regular employment is the flipside of the difference in entitlement to the family-supportive
rewards based on the male breadwinner model.
Moreover, the distinction also implies another assumed difference, the difference inthe extent of a worker’s skills and abilities. In Japanese firms, which are eager to develop
employees’ firm-specific skills through on-the-job training, it is assumed that regular employees
tend to have higher skills because of the provision of abundant training opportunities for only
regular employees, part of which is carried out through job rotation and relocation (Aoki, 1988;
Koike, 1988; Sano, 2012). Furthermore, regular employees are assumed to have higher
abilities than non-regular employees, because the former have been recruited through a morecompetitive selection process. These assumed differences, in addition to the difference induties and responsibilities, may also contribute to the legitimation of the inequality in rewards
between regular and non-regular workers.
In summary, the assumed differences in employees’ duties, as well as their opportunities
for skill development and abilities, are attached to the distinction between regular and nonregular employment, which technically implies only a difference in the type of employment
in terms of working hours or labor contract, under the Japanese employment system. Theseassumed differences may contribute to the generation and reproduction of a large income
gap between regular and non-regular workers by legitimating it independently of the genderdifference and other job-related or personal differences in Japan. Although the distinction might
be meaningful within a firm,4 it widely prevails in Japanese society as “shared understandings”(Dunlop, 1958, p. 16) on the categorization of workers. Thus, we attempt to explore whether
these assumed differences prevailing in Japanese society may legitimize the large income
gap between regular and non-regular employment in comparison with other countries.

2.2.
Legitimation of rewards inequality in different
institutional settings
The characteristics of the Japanese employment system can be clearly seen by comparing
it with South Korea and the United States. These three countries have different institutionalsettings that may affect the extent and the legitimation of the income gap between regular andnon-regular employment. Considering the case of Japan in the previous section, we rate thethree countries according to the extent of the male breadwinner model and livelihood security
provided by firms (Figure 1).
early marriage and no divorce.
4. Takahashi revealed that the wage gap between regular and non-regular employment occurs within afirm rather than between firms in Japan (Takahashi, 2016).

6

FFJ DISCUSSION PAPER #19-02

However, regular employment is not more advantageous than non-regular employment

South Korea also has a strong male breadwinner model, while the livelihood security
system provided by Korean firms is not as strong as the one in Japan (Jung and Cheon,
2004). Therefore, the difference between regular and non-regular employment may not imply
a difference in entitlement to family-supportive rewards, which corresponds to the difference
between male breadwinners who work full-time and female supplementary earners who work
part-time or with a fixed-term contract in Korea. Although the increase in non-regular workers
and their comparatively low rewards is becoming a serious problem in Korean society (Shin,2012), there seems to be a critical difference between South Korea and Japan regarding how
this disparity occurs and how it is legitimized due to a difference in institutional settings, asargued above.
In the United States, both the male breadwinner model and the livelihood security provided
by firms are relatively weaker than in Japan. The United States has been characterized as aliberal market economy, in which the market mechanism plays a critical role in gaining accessto resources that people need in order to make a living (Esping-Andersen, 1999; Estevez-Abe
et al., 2001). The labor market in this country has been crucially driven by the mechanism of
supply and demand. Workers who have skills in high demand in the labor market tend to haveaccess to well-paying jobs, regardless of gender and race. In addition, the greater labor market
flexibility in the U.S. does not require organizations to hire as many non-regular workers as
in countries with rigid labor market structures with higher employment protection for regular
workers, which is the case in Japan. Given the situation in the U.S., there is a possibility thatthe gap between regular and non-regular employment is smaller than other countries both interms of the real income and just income. Therefore, it is useful to compare the three countries
in order to consider how people’s ideas about income inequality depend on the institutional
contexts of employment and welfare.

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FFJ DISCUSSION PAPER #19-02

Figure 1. Positions of the three countries in institutional settings

We utilize factorial vignette survey data on just income to explore whether and how muchpeople accept the income gap in the three countries. A factorial vignette survey is a method that
presents sets (=vignettes) of a fictitious but concrete situation that consists of various factors
and asks respondents to evaluate each vignette (Atzmüller and Steiner, 2010; Wallander,2009). In each vignette, the levels of the factors can be randomly chosen to construct thevignette. Thus, we can construct vignettes so that factors have no correlation to each other,which enables us to examine the unique effects of factors independently of the others. Thanks
to this advantage, it is possible to disentangle the effect of the distinction between regularand non-regular employment on just income from the effects of gender by utilizing factorial
vignette survey data, although both are complexly intertwined in the real world.5
So far, dozens of studies on just income have been conducted by analyzing data fromfactorial vignette surveys that ask for respondents’ evaluations of the level of income that is
appropriate for fictitious workers with various attributes. They have revealed that levels ofjust income differ according to their occupations (Kelley and Evans, 1993; Kelley and Evans,
2009; Osberg and Smeeding, 2006). They have also demonstrated that the just income offemales is lower than that of males, controlling for other factors, and even female respondents
report that the just income for females should be lower than that of males (Auspurg et al.,2017; Jasso, 1994). We can interpret the results as indicating that respondents accept theseincome differences as a fair gap.
However, there have been few studies on the just income gap according to job-related
factors other than occupation, such as the distinction between regular and non-regular workers.
Moreover, no studies conduct an international comparison of just income and legitimationof income inequality focusing on Asian societies with different employment systems from
Western societies. As a result, little is known about whether and how different employment
systems between countries legitimize the income gap between workers.
Thus, our research project consisted of a factorial vignette survey on just income
focusing on the gap between regular and non-regular employment, as well as the genderand other attributes of workers, conducted in Japan, South Korea, and the United States.
Our survey also includes questions on respondents’ assumptions regarding the differences induties, opportunities for skill development, and abilities between two types of workers (e.g.,
regular and non-regular workers) to examine whether these assumptions contribute to thelegitimation of income gaps among workers. By utilizing the vignette survey data, we examine
the following research questions in this paper.
1. How do the levels of just income for various workers differ according to the type of
employment, gender, and other attributes of workers in Japan, South Korea, and theUnited States?
2. Do disadvantaged earners oppose earnings inequality based on these attributes, or do
5. A vignette survey also has the advantage that responses are easy and they have less desirability bias
because the target of evaluation is not conceptual but concrete.

8

FFJ DISCUSSION PAPER #19-02

3. Just income analysis based on factorial vignette
survey data

3. To what extent can the acceptance of earnings inequality be explained by respondents’assumptions about duties, opportunities, and abilities?

4.

Data and methods
4.1.

Data

The data for this study was obtained from the “2018 SARI survey”6 that we conductedin August 2018. This was a web survey, whose samples were survey-takers registered with aresearch company. We limited our samples to those who are currently employed and are aged
30 to 59.7 The sample size was 2,487 in Japan, 2,031 in Korea, and 1,879 in the U.S.
The main part of this survey consists of questions asking for respondents’ evaluationsof the just income of various fictitious workers. The following six attributes describe thevignettes of workers:8 age (28 years old/43 years old), gender (male/female), education (highschool/vocational school or vocational junior college or community college/university), type of
employment (regular employee without fixed-term contract/contract employee), occupation(programmer/stock person), and family (single with no children/married with two children). The
total vignette universe numbers 96 (=2*2*3*2*2*2) and they are divided into six subsets with
16 vignettes, each of which is randomly assigned to respondents.9
1) Mr. Smith works at a company with 1,000 employees. He is a full-time (NoFixed-term Contract) employee who is a programmer at this company. Mr. Smithis an unmarried, high school graduate who is 43 years old. How much should Mr.
Smith be paid for his job? Please include taxes in your answer.
Annual Salary (Including Tax) ________ Thousand Dollars Should Be Paid
Employment Type

Position

Education

FamilyAge

GenderUnmarried

43

Male

Full-Time (NoFixed-term
Mr. SmithContract)

High
Programmer

SchoolFigure 2. Example of a question on just income

Figure 2 is an example of a vignette. As shown in the figure, a brief vignette text describing
a fictitious worker is presented to a respondent. Below the text, a table for a summary of theworker’s attributes is also shown. Then respondents are asked how much they think thisworker should be paid.10
6..SARI is an abbreviation of “Sociological Analysis of Reward Inequality.”
7. We rely on quota sampling based on age groups, gender, and education. For education, only total
proportions are represented by our samples.
8. Firm size is fixed to 1,000 employees to reduce the number of factors.
9. They are divided into subsets so that they have the highest D-efficiency based on Dülmer (2007). The
order of presenting the 16 vignettes in each subset to respondents is also randomized.
10. This means that we use a direct measurement for just income (Markovsky and Eriksson, 2012).

9

FFJ DISCUSSION PAPER #19-02

they accept it in these countries?

“obligations for doing sudden overtime and/or work over the holidays,” “opportunities for job
experience and training,” and “ability to learn a new job and to perform it well” between workers
with different attributes (e.g., full-time workers without a fixed-term contract and contract
employees). It also includes questions about respondents’ attributes and job conditions,
including the type of employment.

4.2.

Methods

We conduct multilevel analyses to examine how the level of just income differs according
to vignette attributes, respondent’s attributes, and the interaction of both. The dependent
variable is the logarithm of the just income of various vignettes answered by respondents.
The independent variables in level 1 (vignette level) are dummy variables for six factors that
construct vignettes: age, gender, education, type of employment, occupation, and family offictitious workers. The independent variables in level 2 (respondent level) are personal andjob-related variables of respondents coded to harmonize with corresponding vignette attribute
variables: age (less than or equal to 35/over 35), gender, education, type of employment(regular/non-regular employment), occupation (manual/non-manual), and family (having achild(ren)/having no children). Respondent’s individual annual income (logged) is also included
as an independent variable in level 2.
Based on the results of the model without interaction terms, we first test the main effectof vignette attributes to answer research question 1. A significant main effect of a vignette
attribute implies that respondents think there should be an income gap according to the factor.
For example, if the dummy variable of non-regular workers has a significant negative effect,
it means respondents think that the just income of non-regular workers is lower than that ofregular workers.
Next, we add the interaction terms between a vignette attribute and a corresponding
respondent’s attribute to the model to answer research question 2. For example, we add theinteraction term between a female vignette and a female respondent, between a contractworker vignette and a respondent in non-regular employment, and so on. If the interaction
term has a significant effect, a disadvantageous respondent and an advantageous respondent
think differently about the level of just income gap between a vignette with the same attributeas themselves and a vignette without it.
We also add variables on respondents’ assumptions about the difference in levels of
duties, opportunities for skill development, and abilities according to the vignette attribute andobserve the changes in main and interaction effects of the factor to answer research question
3. If main and interaction effects decrease by adding the variable regarding the assumption,
we can conclude that the assumed difference according to the factor explains the gap in justincome. In other words, it contributes to the legitimation of income inequality.

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FFJ DISCUSSION PAPER #19-02

This survey also asks respondents’ assumptions about the differences in levels ofResults
5.1.

Main effects of vignette attributes

Table 1 shows the results of the multilevel analysis of the just income of fictitious workers.
Model 1 is the model that only has the main effects of the vignette and respondent’s attributes.
Among the effects of vignette attributes, we find that all of the “28-year-old,” “stock person,”“high school graduate,” and “vocational school graduate” variables have significant negative
effects in Japan, Korea, and the U.S., which implies that the effects of age, occupation, andeducation are similar among the three countries. People commonly think that the income of
28-year-old workers should be lower than that of 43-year-old workers, the income of stock
persons should be lower than that of programmers, and the income of high school graduates
and that of vocational school graduates should be lower than that of college graduates in all
countries. We can conclude that the effects of human capital-related attributes, such as age,occupation, and education, on just income are consistent among the three countries.11
Furthermore, being childless has negative effects in all three countries. People think thatworkers who do not have a child should be paid less than workers who have two children. Thissuggests that the concept of need-based income is accepted in all three countries, although
the effect size is small.
In contrast, the effects of gender and type of employment are different between the U.S.
and the other two countries. While there are no significant effects related to the “female” and“contract worker” variables in the U.S., these variables have significant negative effects onjust income in Japan and South Korea. This means that people think the just income of female
workers is lower than that of male workers, and the just income of contract workers is lower
than that of regular workers in Japan and South Korea, although this is not the case in the
United States. From these results, it can be observed that income gaps between these groups
are accepted as just in Japan and South Korea but not in the U.S. Especially in Japan, theeffects of type of employment are the third largest among the factors: just income for contract
workers is lower than that for regular workers by six percent. Although it is smaller than theactual income gap, it is larger than in the other countries.

11. On the other hand, the magnitude of the effects differs to some extent among the countries. For
example, the just income gap between a stock person and a programmer is quite large in the U.S.
compared to Japan and Korea.

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FFJ DISCUSSION PAPER #19-02

5.

JapanSouth Korea

Model 1Vignette attributesｂModel 1Model 2
S.E.

ｂ

S.E.

ｂ

The United States
Model 2S.E.

ｂModel 1Model 2

S.E.

ｂ

S.E.

ｂ

S.E.

Female (vs. Male)-0.045 ***0.002-0.037 ***0.002-0.049 ***0.002-0.048 ***0.002-0.0030.003-0.0040.005

Contract worker (vs. Regular worker)-0.062 ***0.002-0.060 ***0.002-0.041 ***0.002-0.042 ***0.002-0.0050.003-0.006

0.004
0.004

No children (vs. Married with 2 children) -0.032 ***0.002-0.037 ***0.003-0.031 ***0.002-0.033 ***0.002-0.010 **0.003-0.010 *Stock person (vs. Programmer)-0.170 ***0.002-0.171 ***0.002-0.089 ***0.002-0.094 ***0.002-0.389 ***0.003-0.421 ***0.004

28 years old (vs. 43 yrs old)

-0.100 ***0.002-0.103 ***0.002-0.134 ***0.002-0.142 ***0.002-0.023 ***0.003-0.023 ***0.004

Education(ref: College)
High school-0.052 ***0.002-0.052 ***0.003-0.046 ***0.002-0.054 ***0.003-0.061 ***0.004-0.087 ***0.007

Vocational school-0.041 ***0.002-0.041 ***0.003-0.023 ***0.002-0.029 ***0.003-0.025 ***0.004-0.038 ***0.007

Respondent's attributes
Female-0.011

0.011-0.001

0.012-0.001

0.011

0.000

0.011

-0.0040.020-0.0060.020

Non-regular worker

0.040 **

0.015

0.044 **

0.015

0.049 **

0.017

0.044 *

0.017

0.089 **

0.028

0.087 **

0.029

Having no children

0.003

0.010

-0.0010.010-0.0160.011-0.020 †0.011-0.0080.019-0.0090.020

Manual worker

0.015

0.012

0.013

0.012

-0.0030.013-0.013

0.013

0.000

0.021

-0.042 †0.021

Youth (-35)-0.021

0.015-0.031 *0.015

0.024 †

0.014

0.002

0.014

0.005

0.023

0.004

0.023

Education(ref: University)
High school

0.001

0.012

-0.001

0.012

0.002

0.012

-0.010

0.013

0.012

0.022

-0.0090.022

Vocational school/Community college

0.000

0.013

0.004

0.013

-0.030 †0.018-0.035 †

0.018

0.029

0.035

0.013

0.036

Individual income

0.172 ***

0.011

0.172 ***

0.011

0.128 ***

0.011

0.128 ***

0.011

0.191 ***

0.013

0.191 ***

0.013

-0.002

0.003

0.002

0.007

Interaction between vignette attributes(v) and respondent's attributes(r)Female(v)*Female(r)-0.020 ***Contract(v)*Non-regular(r)-0.009 *0.004

0.009 †

0.005

0.004

0.009

No children(v)*No children(r)0.008 *

0.004

0.007 *

0.004

0.002

0.007

0.004

Stock person(v)*Manual(r)

0.002

0.004

0.020 ***

0.004

0.085 ***

0.007

28 years old(v)*Youth(r)0.020 ***

0.005

0.043 ***

0.004

0.002

0.008

High school(v)*High school(r)

0.006

0.005

0.019 ***

0.005

0.044 ***

0.009

High school(v)*Vocational/JC(r)-0.006

0.006

0.010

0.007

0.025

0.015

Vocational(v)*High school(r)

0.003

0.005

0.015 **

0.005

0.020 *

0.009

Vocational(v)*Vocational/JC(r)-0.006

0.006

0.007

0.007

0.024

0.015

5.115 ***

0.072

7.246 ***

0.091

3.169 ***

0.061

Constant

5.116 ***

0.072

7.234 ***

0.090

3.138 ***

0.061

-2LL

-18098-18158-22731-22881

14668

14486

N(obs)

39760

39760

32192

32192

28816

28816

N(groups)

2485

2485

2012

2012

1801

1801

***p<.001 **p<.01 *p<.05 †p<.1

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FFJ DISCUSSION PAPER #19-01

Table 1. Multi-level analysis of just income (logged) of fictitious workers

Model 2 of table 1 is the model that includes interaction terms between the vignette
and respondent’s attributes of the same facet, such as one between the female vignette andfemale respondent, in addition to their main effects. We coded dummy variables of the vignette
and respondent’s attributes so that a disadvantageous position in the income structure ofthese societies, like that of non-regular workers, takes the value of one. Therefore, a positiveeffect of the interaction term means that respondents in a disadvantageous position thinkthat a smaller income gap between the advantageous and disadvantageous groups is justthan respondents in an advantageous position do. According to the social identity theory,
people evaluate distributive justice in a way favorable to themselves (Shamon and Dülmer,2014). Thus, we can expect that the interaction terms between the vignette and respondent’s
attribute have positive effects. In contrast, according to the reward expectation theory, we
can also assume there is little difference in the just income gap between those who are in anadvantageous position and those who are in a disadvantageous position.
Table 1 shows that almost all of the coefficients of interaction terms are positivein South Korea and the United States as we expect, even though some of them are notstatistically significant. However, there are significant negative interaction effects between afemale vignette and a female respondent and between a contract worker vignette and a nonregular worker respondent in Japan. These negative effects mean that female respondents
in Japan think that a larger income gap between male workers and female workers is justthan male respondents do, and non-regular worker respondents think that a larger income
gap between regular workers and contract workers is just than regular worker respondents
do. In other words, female and non-regular respondents, who receive lower income than theircounterparts on average, more strongly accept the income gap according to gender and typeof employment, respectively, in Japan.
How can we explain the over-acceptance of the income gap by females and non-regular
workers against their own interests? In the following sections, we answer this question by
exploring the assumed difference in duties, opportunities for skill development, and abilities
between the two groups, focusing on the income gap between regular and non-regular workers
and its acceptance.

5.3.
Assumed differences between regular and non-regular
workers
Figure 3 shows responses to the question “From the following two employee groups,
which group, on average, do you think has greater obligations for doing sudden overtime
and/or work over the holidays?” from regular and non-regular employees based on a sevenpoint scale from “1: Full-time (no-fixed term contract) employee has a greater obligation” to“7: Contract employee has a greater obligation.” About 70% of Japanese respondents thinkthat the former has a greater obligation to work overtime and on holidays, while only 4%
assume that the latter has greater obligations. Compared to Korea (49% versus 22%) andthe U.S. (34% versus 25%), we can see that there is a stronger assumption that regular

13

FFJ DISCUSSION PAPER #19-02

5.2.
Interaction effects between the vignette andrespondent’s attributes

distinction between the two types of employees, which technically denotes only the differencein the period of the labor contract, is accompanied by an assumed difference in duties in theworkplace in Japan.
The responses to the question asking about differences in duties between female andmale employees (Figure 4) show a clear contrast between those of regular and non-regular
employees. The assumption that males should accept overtime work instead of female
employees is stronger in Korea (50% versus 9%) than in Japan (25% versus 10%) and the
U.S. (13% versus 12%). While the responses in the U.S. are perfectly balanced to show genderequality in the workplace, the imbalance in Japanese responses is not strong compared to
Korea or compared to the Japanese responses regarding the difference between regular andnon-regular employees. Although the distinction between regular and non-regular employees
is strongly connected to gender roles, as we previously argued, the assumed difference induties in the workplace is more obvious between regular and non-regular employees thanbetween male and female employees in current-day Japan. We can conclude that the assumed
difference in duties in the workplace between males and females, which was originally basedon the male breadwinner model, has already transferred to the distinction between regularand non-regular employment in Japan, while it remains within the gender relationship, leading
to a smaller assumed difference between regular and non-regular employees in Korea.

Figure 3. Assumptions about duties of regular and non-regular workers

Figure 4. Assumptions about duties of female and male workers

14

FFJ DISCUSSION PAPER #19-02

employees should accept overtime work instead of non-regular employees in Japan. Thus, theFigure 6. Assumptions about the abilities of regular and non-regular workers

Responses to the questions asking about differences in opportunities for job experienceand training (Figure 5) and the ability to learn a new job and to perform it well (Figure 6)
between regular and non-regular employees show a similar pattern. The assumption that
regular employees have more opportunities or better abilities than non-regular employees
is stronger in Japan and Korea compared to the United States. We can observe that thedistinction is utilized as a hierarchical categorization of employees in the human resource
management of Japanese and Korean firms.

5.4.
Changes in effects by adding variables on respondents’assumptions
We will examine whether these assumptions explain the just income gap between regular
workers and non-regular workers and its over-acceptance by non-regular worker respondents
in Japan and South Korea. To this end, we add the interaction terms between the contract
worker vignette and respondents’ assumptions about duties, opportunities, and abilities tothe model and observe the changes in the effects of the contract worker vignette and theinteraction term between the contract worker vignette and non-regular worker respondent.
Table 2 shows the results of Japanese respondents. Model 3 is the baseline model
constructed by adding variables of a respondent’s assumptions about the duties, opportunities,
15

FFJ DISCUSSION PAPER #19-02

Figure 5. Assumptions about opportunities of regular and non-regular workers

Contract worker (vs. Regular worker)

Model 4Model 5Model 6

Model 7

Model 8

ｂ

ｂ

ｂ

ｂ

ｂ

ｂ

-0.060 ***-0.043 ***-0.045 ***-0.056 ***-0.040 ***-0.040 ***-0.0020.004-0.002-0.0020.002-0.002(others variables are also controlled)

Respondent's attributes
More duties for regular workers
More opportunities for regular workers

0.002

0.002

0.009 †

0.002

0.006

0.009

Better ability for regular workers-0.015 **-0.015 **-0.015 **-0.011 *-0.014 **-0.015 **-0.010 *-0.007-0.006-0.007 ***-0.008 ***-0.009 ***-0.009 ***(others variables are also controlled)

Interaction between vignette attributes(v) and respondent's attributes(r)Contract(v)*Non-regular(r)-0.009 *Contract(v)*More duties for regular(r)-0.007 †-0.007-0.012 ***Contract(v)*More opportunities for regular(r)-0.014 ***Contract(v)*Better ability for regular(r)(others variables are also controlled)-0.009 ***-0.001-18195-18285-2LL-18168-18257-18263AIC-18108-18195-18201-18133-18219-18221

BIC-17851-17929-17934-17867-17936-17946N(obs)

39760

39760

39760

39760

39760

39760

N(groups)

2485

2485

2485

2485

2485

2485

-18285***p<.001 **p<.01 *p<.05 †p<.1

Table 2. Multilevel analysis of just income (logged) with respondents’ assumptions (Japan)

and abilities of regular and non-regular employees to model 2 in Table 1. The negative effectof the contract worker vignette (-0.060), which is the same as in model 2, means that regular
worker respondents think the just income of a contract worker is lower than that of a regular
worker (by -0.060 in terms of logged income). The negative effect of the interaction term
between the contract worker vignette and a non-regular worker respondent (-0.009), which isalso the same as in model 2, implies the over-acceptance of the income gap by non-regular
worker respondents: they think that a larger income gap between regular workers and contract
workers is just than regular worker respondents do (by -0.009 in terms of logged income).
Models 4 to 6 are models that include each of the interaction terms between the contract
worker vignette and a respondent’s assumptions about duties, opportunities, and abilities. Allof the added interaction terms in these models have significant negative effects. This implies
that those who assume regular employees have more duties, more opportunities, or better
abilities think that there should be a larger income gap between regular and contract workers.
In other words, the assumed differences in duties, opportunities, and abilities serve as reasonsfor the gap in just income between regular and non-regular employees.
How much do these assumed differences explain the gap in just income and its overacceptance? We can answer this question by observing changes in the coefficients fromthe baseline model. By adding the interaction terms, the main effect of the contract worker
vignette, and the interaction effect between the contract vignette and non-regular worker
respondent, which are of interest to us, diminished in most cases. For example, the main
effect of the contract worker vignette decreases by 29%, from -0.060 in model 3 to -0.043
in model 4. This means that 29% of the gap in just income between regular and non-regular
employment (observed among regular worker respondents) is explained by the tendency of
16

FFJ DISCUSSION PAPER #19-02

Vignette attributes

Model 3

gap is just between the two types of employment. Likewise, the decrease of 18% in the effectsof the interaction term between the contract vignette and non-regular worker respondents
from -0.009 in model 3 to -0.007 in model 4 means that the same tendency explains 18% of
the over-acceptance of the income gap by non-regular worker respondents.
The above explanation also applies to model 5; 25% of the gap in just income and
25% of the over-acceptance in model 3 is explained by the tendency of the respondents who
assume regular employees have more opportunities to think that a wider income gap is justbetween regular and non-regular employees. However, this is not the case with model 6 with
the interaction term on the assumption about abilities. The main effect of the contract worker
vignette decreases only slightly, and the interaction between the contract worker vignette andnon-regular worker respondents increases from model 3 to model 6 by adding the interaction
term between the contract worker vignette and a respondent’s assumption about abilities. Thismeans that the assumed difference in ability between regular and non-regular employees does
not explain the gap in just income or its over-acceptance by non-regular worker respondents.
The above results are also confirmed by model 7, which includes all the interaction
terms. In model 7, the interaction terms between the contract worker vignette and respondents’assumptions about duties and opportunities are significant, while the one about abilities isnot. We can conclude that assumed differences in duties and opportunities are particularly
important for explaining the gap in just income between regular and non-regular workers inJapan. Through model 8, which has both interaction terms, we can see that 34% of the gap injust income and 28% of the over-acceptance of it are explained by the tendency of those who
assume regular employees have more duties and opportunities to think that the gap in income
between regular and non-regular employees should be wider.12
Table 3 demonstrates the results of the same models for Korean respondents. The
negative effect of the contract worker vignette (-0.042) implies that regular worker respondents
think that the just income of contract workers is lower than that of regular workers (by -0.042
in terms of logged income). The positive effect of the interaction term between the contract
worker vignette and non-regular worker respondents (0.007) means that non-regular worker
respondents think that there should be a smaller income gap between regular workers andcontract workers than regular worker respondents do (by 0.007 in terms of logged income),
as we expected.
The interaction terms between the contract worker vignette and a respondent’s
assumptions about duties, opportunities, and abilities in models 4 to 6 have smaller effects
than those in Japan, although they are statistically significant. Moreover, the main effect of thecontract worker vignette does not change as much compared to its Japanese counterpart byadding these interaction variables. This implies that the tendency of those who assume that
regular employees have more duties, more opportunities, and better abilities to think the gap
in income should be wider does not explain the gap in just income between regular and nonregular employees as much.13
12. The interaction term between the contract worker vignette and non-regular worker respondent is
no longer significant in model 8. Model 8 is the best-fitted model with the smallest BIC for Japanese
respondents.
13. Although the interaction term between the contract worker vignette and non-regular worker

17

FFJ DISCUSSION PAPER #19-02

the respondents who assume regular employees have more duties to think that a wider income

Model 4

Model 5Model 6

Model 7

Model 8

ｂ

ｂ

ｂ

ｂ

ｂ

ｂ

Vignette attributes
Contract worker (vs. Regular worker)-0.042 ***-0.040 ***-0.038 ***-0.039 ***-0.037 ***-0.038 ***-0.007 *-0.005-0.007 *-0.007 *-0.005-0.005(others variables are also controlled)

Respondent's attributes
More duties for regular workers
More opportunities for regular workers

0.011 **

0.011 **

0.014 **

0.011 **

0.012 **

0.011 **

Better ability for regular workers-0.009 †-0.009 †-0.009 †-0.005-0.006-0.006(others variables are also controlled)

Interaction between vignette attributes(v) and respondent's attributes(r)Contract(v)*Non-regular(r)0.009 †

Contract(v)*More duties for regular(r)0.008

0.009 †

0.007

-0.004 ***Contract(v)*More opportunities for regular(r)-0.004 **Contract(v)*Better ability for regular(r)(others variables are also controlled)

0.007

0.007

-0.003 *-0.003 **-0.001-0.007 ***-0.006 **-0.006 ***-22916-22924-22923-2LL-22893-22909-22902

AIC-22833-22847-22840-22854-22858-22859BIC-22581-22587-22580-22594-22582-22591N(obs)

32192

32192

32192

32192

32192

32192

N(groups)

2012

2012

2012

2012

2012

2012

***p<.001 **p<.01 *p<.05 †p<.1

Table 3. Multilevel analysis of just income (logged) with respondents’ assumptions (Korea)

Among the three interaction terms, we find the one with the assumed difference in abilities
has the strongest effect, and model 6, with only one interaction term regarding ability, is thebest-fitted model with the smallest BIC for Korean respondents. Based on the estimation,
about 9% of the gap in just income between regular and non-regular employment (observed
among regular worker respondents) is explained by the tendency of the respondents who
assume regular employees have better abilities to think that the wider income gap between
the two types of employment is just.

6.

Conclusion and discussion
This paper explored the extent of the gap in just income between regular and non-regular

workers, as well as the gap according to other attributes of workers, and examined whether
even the disadvantaged, such as non-regular worker respondents, accept the pay gap andwhat explains the extent of its acceptance.
Based on the multilevel analysis of the cross-national factorial vignette data from asurvey we conducted in Japan, South Korea, and the United States, we find that respondents
think that income gaps according to human capital-related attributes, such as age, occupation,and education, are fair in all three countries. On the other hand, only Japanese and Korean
respondents think there should be a significant income gap between regular and non-regular
workers, as well as between male and female workers. We can conclude that the income gaps
respondent decreases by adding the interaction terms, it seems to occur in estimation as compensation
for the slight decrease in the main effect of the contract worker vignette in that the sum of the coefficientsof these variables, main effect, and the interaction effect, is consistent across models.

18

FFJ DISCUSSION PAPER #19-02

Model 3

case in the United States.
However, there is a large difference in who accepts the income gap according to thetype of employment and gender between Japan and South Korea. In Japan, respondents
in a disadvantaged position, such as non-regular workers and female respondents, thinkthat the income gap according to the type of employment and gender should be wider thantheir counterparts do, against their own interests. In Korea, we cannot find such a tendency:
non-regular worker respondents accept a smaller income gap as just than regular worker
respondents, for example.
Some extent of the acceptance of income inequality between regular and non-regular
workers and its over-acceptance by the latter in Japan is explained by the assumed differencesin duties and opportunities at the workplace between the two groups. In Japan, the differencein duties in the workplace, such as the obligation to perform overtime work, is attached to the
distinction between regular and non-regular employment, which is technically distinguishedonly by the difference in working hours or the period of the labor contract, and it legitimatesthe income gap between them based on the logic of compensating wage differentials theory(Rosen, 1986). Regular workers are regarded as earning more income in exchange for
accepting larger duties than non-regular workers in Japan. This explanation also applies tothe assumed difference in opportunities between regular and non-regular workers.
We argue that the Japanese employment system has contributed to the attachment ofdifferent duties and opportunities to the distinction between regular and non-regular employees.
The combination of the male breadwinner model and Japanese firms’ practice of securing the
livelihood of employees and their families has made the distinction between regular and nonregular employees imply a difference in entitlement to family-supportive rewards provided
by firms. As a result, regular employment, which is mainly occupied by males, is assumed toentail more duties, as well as more opportunities, and vice versa. The assumed difference induties and opportunities between regular and non-regular employees is based on separate
gender roles, but it has been transferred to the distinction between regular and nonregular
employment and does not persist as much as a gender difference in Japan as in South Korea.14
In South Korea, the distinction between regular and non-regular employment does notaccompany differences in entitlement to family-supportive wages or duties in the workplace as
much, because Korean firms do not have as strong a practice of ensuring the financial securityof employees and their families as Japanese firms do. Therefore, the gap in just income
between regular and non-regular employment is not explained by the assumed difference induties. Although Korean respondents assume there is a difference in opportunities for skill
development between the two groups, it does not contribute to the explanation of the gap injust income as much. The assumption that regular and non-regular workers have different
14. This may suggest the strong autonomy of status system of workers in Japan. Although investigating
why this is so remains a future task, one of the reasons may be the fact that simple and broad jobclassifications and flexible job assignments are common in Japanese firms (Aoki, 1988). There isa possibility that the distinction between regular and non-regular employees to which the assumed
difference in duties, opportunities, and abilities is attached have been developed as a human resource
management device in Japan, where the job differentiation based on occupation is generally weak.
Another possible reason may be the prohibition of gender discrimination by the government, such as
the enactment of the Equal Employment Opportunity Law.

19

FFJ DISCUSSION PAPER #19-02

between these groups are accepted as just in Japan and South Korea, while this is not theassumptions, but most of the differences in just income remain unexplained.
In the U.S., due to the weak male breadwinner model and little livelihood security provided
by firms, in addition to the large labor market flexibility, the distinction between regular andnon-regular employment is not significant in the labor market nor associated with different
duties or abilities. Therefore, the income gap between them is not legitimated; consequently,
there is no just income gap between them.
Income inequalities tend to remain unresolved when they have the logic of legitimation(Costa-Lopes et al., 2013). Based on the analysis in this paper, the income inequality between
regular and non-regular employment in Japan has a stronger logic of legitimation under
the Japanese employment system and, therefore, is more likely to persist than its Koreancounterpart. It is necessary to change the assumptions that legitimate the gaps, by utilizing
the framing perspectives, if useful, to reduce the large income inequality between regular andnon-regular workers in Japan.

20

FFJ DISCUSSION PAPER #19-02

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