The Gini Coefficient and Economic Inequality in Japan: Policy Challenges(Oct 2016)

In order to shake off the problem of income decline, there are three problems which Japan must come to grips with

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  • Mitsumaru Kumagai
  • Satoshi Osanai
  • Keisuke Okamoto
  • Shunsuke Kobayashi
  • Tsutomu Saito
  • Kazuma Maeda
  • Makoto Tanaka

Summary

Characteristics of Japan’s income inequality in an international comparison: Between the years 2000 and 2009, no significant growth was seen in Japan’s income inequality, with both the Gini coefficient and the income gap declining only a small amount. Looking at the real minimum wage and the Gini coefficient, we see that OECD member nations have all increased the minimum wage, and that this tends to increase the real purchasing power of the lower income bracket. As for real employee compensation in the macro sense and real wages (on a man-hour basis), we see that both figures are on the decline in Japan. This tells us that the problem Japan needs to solve in the future is not income disparity, but decline in income. (For details see Japan’s Economic Outlook No. 190, Update (Summary), September 9, 2016, by Mitsumaru Kumagai.)


Three challenges Japan faces in order to break out of income decline: In order to shake off the problem of income decline, there are three problems which Japan must come to grips with: (1) Resolve the discrepancy in pay between regular employees and non-regular employees, (2) Short-term income support for low-income bracket may be valid to a point, but in the mid to long-term, policy should focus on improving value of human capital, and (3) Raising minimum wage is expected to produce the effect of raising the floor on incomes.

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