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The Industrial Organization of the Japanese Bar: Levels and Determinants of Attorney Income

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  • Minoru Nakazato
  • J. Mark Ramseyer
  • Eric B. Rasmusen
Abstract
Using micro‐level tax data on attorney incomes in 2004 (when the law was changed to make it confidential), we analyze the industrial organization of the Japanese bar. These data suggest two sources of high income: an idiosyncratic return to talent in Tokyo and a compensating differential for the lack of amenities in the provinces. The most able would‐be lawyers (those with the highest opportunity costs) pass the bar‐exam equivalent on one of their first tries or abandon the effort and pursue careers outside of law. If they pass, they opt for careers in Tokyo that involve complex litigation and business transactions. This work places a premium on their talent, and from it they earn appropriately high incomes. The less talented face lower opportunity costs and opt to spend many years studying for the exam. If they do eventually pass, they apparently choose between a relatively low‐income career in Tokyo and a provincial career paying a compensating differential.

Suggested Citation

  • Minoru Nakazato & J. Mark Ramseyer & Eric B. Rasmusen, 2010. "The Industrial Organization of the Japanese Bar: Levels and Determinants of Attorney Income," Journal of Empirical Legal Studies, John Wiley & Sons, vol. 7(3), pages 460-489, September.
    • Handle: RePEc:wly:empleg:v:7:y:2010:i:3:p:460-489
    DOI: 10.1111/j.1740-1461.2010.01185.x
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    1. Milhaupt, Curtis J. & West, Mark D., 2004. "Economic Organizations and Corporate Governance in Japan: The Impact of Formal and Informal Rules," OUP Catalogue, Oxford University Press, number 9780199272112.
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    Cited by:

    1. J. Mark Ramseyer & Eric Rasmusen, 2013. "Lowering the Bar to Raise the Bar: Licensing Difficulty and Attorney Quality in Japan," Working Papers 2013-12, Indiana University, Kelley School of Business, Department of Business Economics and Public Policy.
    2. Eiji Yamamura, 2011. "Brand and Performance in a New Environment: Analysis of the Law School Market in Japan," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 39(2), pages 155-164, June.
    3. Yamamura, Eiji, 2010. "The effect of learning varies according to locality: Micro data analysis of the lawyer market in Japan," Japan and the World Economy, Elsevier, vol. 22(3), pages 193-197, August.
    4. Ramseyer, J. Mark & Rasmusen, Eric B., 2007. "Political uncertainty's effect on judicial recruitment and retention: Japan in the 1990s," Journal of Comparative Economics, Elsevier, vol. 35(2), pages 329-345, June.
    5. Yamamura Eiji, 2008. "The Market for Lawyers and Social Capital: Are Informal Rules a Substitute for Formal Ones?," Review of Law & Economics, De Gruyter, vol. 4(1), pages 499-517, December.

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    JEL classification:

    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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