A study was conducted to test the proposition that intensive formation of human capital on the job is the basic reason for the strong degree of worker attachment to the firm in Japan. The greater emphasis on training and retraining, much of it specific to the firm, results also in steeper wage trajectories, because of growth of skills in the firm, according to this hypothesis. The study measured wage profiles and turnover in age groups, and it tested the inverse relation between the two on industry sectors in Japan and the United States. Numerical estimates of this relation led to the conclusion that as much as two-thirds of the differential in turnover between the two countries is explainable by the differences in the steepness of the profiles. The study determined that the emphasis on human capital formation on the job is so much greater in Japan than in the United States because such emphasis is conditioned by rapid economic growth. Using productivity growth indexes for industries in the United States and Japan confirms the hypothesis that rapid technical change that induces greater and continuous training is in part responsible for steeper profiles and for less turnover. The study concluded that differences in productivity growth between the United States and Japan account for up to 80 percent of the differences in the steepness of wage profiles, and indirectly for the differences in turnover. The hypothesis also holds up for Japanese plants in the United States, where the steeper tenure-wage slopes and lower turnover are much closer to Japan than to the United States. (Author/KC)