GINI Country Report: Growing Inequalities and their Impacts in Japan

Fumio Ohtake, Miki Kohara, N. Okuyama and K. Yamada

GINI Country Reports from AIAS, Amsterdam Institute for Advanced Labour Studies

Abstract: Inequality has widened continuously since the 1980s in Japan. The widening gap between the haves and have-nots has been driven by different factors in each given period. Ohtake and Saito (1998) argue that inequality in the 1980s and 1990s can be explained mainly by population aging. Dispersions of income, consumption expenditure, and wealth within the age group increase among the elderly, so an increase in older people leads to a rise in income inequality across the entire country. The growing income and wealth inequalities observed in the UK and the US since the 1980s are characterized by a widening income gap due to educational attainment and an increase in the incomes of higher income groups (Autor, Katz, and Kerney, 2006; Lemieux, 2006; Piketty and Saez, 2006). In contrast, in Japan, wage inequality due to educational attainment has remained relatively stable over the period 1980-1990. This does not mean that skill-based technological change (SBTC) has not substantially affected Japan over time. Kawaguchi and Mori (2008) showed that both the demand and supply for skilled workers have increased because of the SBTC, a rise in the number of college-educated workers induced by educational policy changes, and the aging of the population. Because the shifts in demand and supply are similar, the effects of the shifts on the skill price were canceled out. Thus, the skill price has been stable. They pointed out that the industries that experienced rapid computerization also experienced an upgrading of the skills of workers.

Date: 2013-04
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