Income Risk, Consumption Inequality, and Macroeconomy in Japan

Tomoaki Yamada

Global COE Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: In this paper, using an OLG model with heterogeneous households, we investigate economic inequality in the recent decades in Japan. We decompose the causes of economic inequality into macroeconomic factors and a demographic factor, and demonstrate that the earning inequality in the model replicates the actual evolution of inequality in Japan. Based on a counterfactual simulation, we demonstrate that time-varying macroeconomic factors play an important role in the evolution of economic inequality. In particular, we show that the low growth rate of total factor productivity in the 1990s in Japan limited the dispersion of economic inequality.

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: 2009-03
New Economics Papers: this item is included in nep-cmp, nep-dge and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:hst:ghsdps:gd08-041

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