Sustainable Path to Inclusive Growth in Japan: How to Tackle Income Inequality?

Market income inequality in Japan has been on a steady rise since the 1980s, and is now close to the OECD average. Gross and disposable income inequality, on the other hand, have risen much less but remain higher relative to several comparator countries.
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Volume/Issue: Volume 2024 Issue 026
Publication date: July 2024
ISBN: 9798400282232
$15.00
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Topics covered in this book

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Economics- Macroeconomics , Demography , Inequality , labor market duality , wage gap , fiscal transfers , labor market dualism , household panel survey data , wage income , inequality index decomposition , Income inequality , Income , Income distribution , Aging , Capital income , Global

Summary

Market income inequality in Japan has been on a steady rise since the 1980s, and is now close to the OECD average. Gross and disposable income inequality, on the other hand, have risen much less but remain higher relative to several comparator countries. This paper employs inequality index decompositions by income source using household panel survey data from 2010-19 to identify the factors driving income inequality in Japan. Results indicate that while increase in the employment of females and the elderly in the last decade has helped lower income inequality, this has been offset by them being mostly employed in low-paid part-time nonregular jobs. Rapid aging of the population has also exacerbated income inequality over time. Moreover, while fiscal redistributive effects of social transfers are found to be a somewhat equalizing force, its impact on inequality is relatively weaker.