Income risk, macroeconomic and demographic change, and economic inequality in Japan

Tomoaki Yamada

Journal of Economic Dynamics and Control, 2012, vol. 36, issue 1, 63-84

Abstract: Using an OLG model with heterogeneous households, we investigate the relationship among income risk, macroeconomic and demographic changes, and economic inequality between 1980 and 2000 in Japan. By decomposing the primary factors in earnings and consumption inequality into macroeconomic variables and the demographic variable, we find that our model replicates the evolution of economic inequality in Japan. By performing counterfactual simulations, we demonstrate that two factors—changes in time-varying macroeconomic factors and the unexpected decline in the total factor productivity growth rate—played important roles in the increase in earnings and consumption inequality in the 1990s.

Keywords: Income risk; Consumption inequality; Population aging (search for similar items in EconPapers)
JEL-codes: D11 D31 D91 E21 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:36:y:2012:i:1:p:63-84

DOI: 10.1016/j.jedc.2011.07.001

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