In this work, we propose adopting step-type quantum wells to improve the external quantum efficiency for GaN-based yellow micro light-emitting diodes. The step-type quantum well is separated into two parts with slightly different InN compositions. The proposed quantum well structure can partially reduce the polarization mismatch between quantum barriers and quantum wells, which increases the overlap for electron and hole wave functions without affecting the emission wavelength. Another advantage is that the slightly decreased InN composition in the quantum well helps to decrease the valence band barrier height for holes. For this reason, the hole injection capability is improved. More importantly, we also find that step-type quantum wells can make holes spread less to the mesa edges, thus suppressing the surface nonradiative recombination and decreasing the leakage current.