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Institutions, Deindustrialization, and Functional Income Distribution in Japan

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Labor Income Share in Asia

Part of the book series: ADB Institute Series on Development Economics ((ADBISDE))

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Abstract

We investigate the long-term drivers of the labor share in Japan using data from the Japanese Industrial Productivity database from 1970 to 2012. The descriptive and econometric results indicate that the decline in the labor share observed in Japan during the period of analysis was highly concentrated in the low-knowledge-intensity sectors, the employment share of which has increased remarkably. These sectors also experienced a strong increase in non-regular workers, who constitute a secondary segment of the labor market in Japan, characterized by low wages and very limited union coverage. The low level of protection of this group of workers and the increase in market power concentration have probably contributed to reducing the bargaining power of labor vis-à-vis employers and, consequently, the labor share.

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Author information

Authors and Affiliations

  1. Institute of Economic Research, Hitotsubashi University, Tokyo, Japan

    Kyoji Fukao

  2. Department of Economics, University of Perugia, Perugia, Italy

    Cristiano Perugini

Authors
  1. Kyoji Fukao
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  2. Cristiano Perugini
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Corresponding author

Correspondence to Cristiano Perugini .

Editor information

Editors and Affiliations

  1. Cornell University, Ithaca, NY, USA

    Gary Fields

  2. Asian Development Bank Institute, Chiyoda-ku, Tokyo, Japan

    Saumik Paul

Appendix A: Industry Aggregates

Appendix A: Industry Aggregates

Industry aggregate

 

TME

Total market economy:

all JIP sectors excluding housing (72), private education (80), private research (81), private medical (82), and private hygiene (83)

NPME

Non-primary market economy:

ME minus primary sectors (1–6) and mining (7)

MAN

Manufacturing:

JIP sectors 8–59

MLM

Medium- and medium-low-technology manufacturing:

JIP sectors: 8–22, 30–41, and 58–59

MHM

Medium- and medium-high-technology manufacturing:

JIP sectors: 23–29 and 42–57

MSERV

Market services:

JIP sectors: 61, 67–71, 73–79, and 85–97

LKIS

Less-knowledge-intensive services:

JIP sectors: 67–68, 71, 73–74, 77, 79, 86–88, and 94–97

KIS

Knowledge-intensive services:

JIP sectors: 61, 69–70, 75–76, 78, 85, and 89–93

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Fukao, K., Perugini, C. (2019). Institutions, Deindustrialization, and Functional Income Distribution in Japan. In: Fields, G., Paul, S. (eds) Labor Income Share in Asia. ADB Institute Series on Development Economics. Springer, Singapore. https://doi.org/10.1007/978-981-13-7803-4_9

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