Working Paper: NBER ID: w14537
Authors: Chiaki Moriguchi
Abstract: Using wage income tax statistics, we construct continuous series of upper wage income shares in Japan from 1951 to 2005 to document the evolution of top wage incomes and investigate their long-run determinants. We find that, while the middle wage income class gained enormously both in absolute and relative terms during the period of high economic growth, the upper wage income class faired comparatively better after 1975. In particular, the share of total wage accruing to the top 1% wage earners has risen steadily in the last ten years. Using a simple time-series regression analysis, we find that marginal income tax rates, corporate performance, female labor participation, and labor disputes are important determinants of top wage income shares in post-WWII Japan. Although not conclusive, our results suggest that much of the recent gains in wage income shares at the top can be explained by the changes in these four factors, placing a less emphasis on a story of structural change.
Keywords: Wage Inequality; Income Distribution; Japan; Taxation; Labor Economics
JEL Codes: D31; J30; O15
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Marginal income tax rates (H29) | Top 1 wage income shares (D33) |
| Corporate performance (L25) | Top 0.1% income share (D33) |
| Female labor participation rate (J21) | Top 0.1% share (D33) |
| Labor disputes (J52) | Top 0.1% share (D33) |