Wage,income and consumption inequality in Japan, 1981–2008: From boom to lost decades

In this paper we document the main features of the distributions of wages, earnings, consumption and wealth in Japan since the early 1980s using four main data sources: the Basic Survey on Wage Structure (BSWS), the Family Income and Expenditure Survey (FIES), the National Survey of Family Income and Expenditure (NSFIE) and the Japanese Panel Survey of Consumers (JPSC). We present an empirical analysis of inequality that specifically considers the path from individual wages and earnings, to household earnings, after-tax income, and finally consumption. We find that household earnings inequality rose substantially over this period. This rise is made up of two distinct episodes: from 1981 to 1996 all incomes rose, but they rose faster at higher percentiles; from 1996 to 2008 incomes above the 50th percentile remained flat but they fell at and below the 50th percentile. Inequality in disposable income and in consumption also rose over this period but to a lesser extent, suggesting taxes and transfers as well as insurance channels available to households helped to insulate household consumption from shocks to wages. We find the same pattern in inequality trends when we look over the life cycle of households as we do over time in the economy. Additionally we find that there are notable differences in the inequality trends for wages and hours between men and women over this period.     

Household savings in Japan revisited

This paper investigates household saving behaviour by different cohorts with various household characteristics in Japan. Pooling the National Survey of Family Income and Expenditure in 1984, 1989 and 1994, the cohort analysis finds a substantial behavioural difference in the baby-boomer generation in Japan after 1989. As this generation is the largest demographic group, this finding provides valuable information to policy makers, especially in terms of intergenerational equity.     

ARE EQUIVALENCE SCALES THE SAME FOR THE UNITED STATES AND CANADA?

This research uses microdata from the 1986 Statistics Canada Family Expenditure Survey and from the 1986–88 U.S. Consumer Expenditure Survey to estimate equivalence scales using a methodology which is very similar to that employed by Statistics Canada for the estimation of Low-Income Cutoffs. Employing identical sample selection criteria and identically specified models, we find that equivalence scales for the two countries are not, in general, statistically different when estimated in the same way. The larger issue is then whether the two countries should choose the same methodology for the estimation of equivalence scales.     

A SIMPLIFIED INTEGRATED FORM OF SNA AND MPS*

At present two systems of measurement of national product are in practice, one as defined in the UN System of National Accounts (SNA) and the other termed the Material Product System (MPS) or National Balances for the Economy. In the present paper, an expanded system of accounts integrating the national balances within the framework of a simplified SNA has been suggested. The accounts suggested are mainly the two sets of (i) Supply, Disposition and Domestic Production of goods and services and Consumption Expenditure of Budget and Mixed Organisations and the Population, and (ii) Income and Outlay and Capital Formation Accounts. The system is convenient not only for arriving at estimates by either of the two approaches, but is readily manageable. This set of accounts can, without any effort, be put in the form of a matrix leading to its ultimate integration with either the UN System of National Accounts or a modified system of national balances. The system gives not only the integrated system of SNA and national balances, but also a coded list of transactors and transactions within the economy. This coded list can be used as the first set of information for the creation of the economic data bank for the Integrated Statistical Information System.     

Consumption and Remittances in Migrant Households: Toward a Productive Use of Remittances

This article reviews the magnitude of remittance flows into Mexican households and examines the consumption patterns of remittance-receiving households. A thorough understanding of the dynamics of remittances and consumption in migrant households in Mexico should inform policy makers of the best ways to channel these resources into productive uses. The Mexican Income and Expenditure Survey for 1989 is used to compare and test patterns of consumption and uses of remittances in urban and rural Mexico. (JEL F2–F22 , O1–O15 )     

CYCLICAL FLUCTUATIONS IN FACTOR SHARES AND THE SIZE DISTRIBUTION OF INCOME

The way in which cyclical fluctuations in activity in the U.K. economy affect factor income shares and the channels through which these effects work through to the size distribution of income are traced. Using National Accounts data, the impact of an upturn in activity in increasing the shares of profits and self-employment income in factor incomes, and of self-employment and rent, interest and dividends in personal incomes, is quantified. Using Family Expenditure Survey micro-data, the resulting shift in decile shares in personal income, which is towards the top of the size distribution, is estimated.     

From households to national statistics: Macroeconomic effects of Women's empowerment

How do shifts in intra-household gender dynamics affect the economy at large? This paper parametrizes intra-household gender-powered decision-making and endogenous distributions of income to allow for the aggregation of key macroeconomic variables. In equilibrium, we find that greater women's empowerment increases precautionary savings to offset low endowment realizations. The effect is stronger among poor households who hedge against hitting a subsistence bound. Given the boost in savings at the bottom of the distribution, more empowerment leads to less poverty and lower income inequality. Another equilibrium prediction of the model is an increase in the household's food intake regardless of income, reflecting women's greater preference for food compared to men. The model's predictions are mapped to Mexico's 2014 National Household Income and Expenditure Survey which identifies the gender of the head of the household. These predictions have policy implications in the areas of monetary policy, social policy, financial intermediation and banking.     

Mexico in the 1990s: The Main Cross-Sectional Facts

This paper describes the main cross-sectional facts on individual and household earnings, labor supply, income, consumption and wealth in Mexico in the decade of the 1990s. We use two different data sources: the Mexican Employment Survey (ENEU) and the Mexican Income and Expenditure Survey (ENIGH). The contribution of this paper is twofold. First, we integrate the two surveys to provide a complete characterization of the changes in employment, wages, income, consumption and wealth in the 1990s. Second, we highlight some distinctive features that characterize the Mexican economy in this decade. In particular, we focus on the changes in the size of the informal sector and we study the relationship between changes in informality and changes in wage inequality.     

New Evidence on Intra‐Household Allocation of Resources in Japanese Households

This paper examines intra‐household allocation of resources to gain insight into family relationships and gender bias in Japanese households. We take the Engel curve approach to examine how adult consumption is affected by the presence of a child, either a boy or a girl, in the family. Empowered by diary‐based high quality spending data from the Family Income and Expenditure Survey, our empirical results show that adult consumption is significantly reduced in households with children; furthermore, gender bias is not observed in total adult expenditures, while responses of adult clothing expenses to the presence of a child are significantly different between a boy and a girl: spending on a father's clothing is reduced when the child is a school‐aged daughter, while spending on a mother's clothing decreases when a school‐aged son is in the home. Our analysis also shows that after the early 2000s girls receive a larger share of spending for children's clothing as well as for high school education than boys.     

Town size and the consumer behaviour of Spanish households: a panel data approach

The aim of this paper is to analyse the effect of town size on the Spanish demand for food. The methodological approach followed in the study is to use panel data built from the Spanish Quarterly National Expenditure Survey to estimate a demand system. The use of this type of data allows control for unobserved time invariant heterogeneity as well as to take into account the time and the cross-section dimension of data. Four locations are distinguished: (1) less than 10000 inhabitants; (2) between 10000 and 100000 inhabitants; (3) between 100000 and 500000 inhabitants; and (4) more than 500000 inhabitants. Eight broad food categories are considered: (1) cereals and potatoes; (2) meat; (3) fish; (4) dairy products; (5) fats and oils; (6) fruits; (7) vegetables; and (8) other food. Income and price elasticities are calculated for each location. In general terms, two general conclusions can be drawn. First, results indicate that only slight changes in tastes have taken place during the analysed period; second, income and price elasticities use to decrease as town size increases.     

Combining Household Income and Expenditure Data in Policy Simulations

The analysis of the distributional impact of fiscal policy proposals often requires information on household expenditures and incomes. It is unusual to have one data source with information on both and this problem is generally overcome with statistical matching of independent data sources. In this paper Grade Correspondence Analysis (GCA) is investigated as a tool to improve the matching process. GCA draws out the relationships between the common variables to enable the sample to be partitioned into more homogeneous groups, prior to matching. An evaluation is conducted using the UK Family Expenditure Survey, which is unusual in containing both income and expenditure at a detailed level of disaggregation. Imputed expenditures are compared with actual expenditures through the use of indirect tax simulations. The most successful methods are then employed to enhance data from the Family Resources Survey and the synthetic dataset is used as a microsimulation model database.     

A NOTE ON COMPUTATION OF THE DOUBLE-HURDLE MODEL WITH DEPENDENCE WITH AN APPLICATION TO TOBACCO EXPENDITURE

This note shows how the sample likelihood of the full double-hurdle model with dependence can be reformulated to allow estimation with standard econometric software. An illustrative example is provided, using data on tobacco expenditure by households in the 1984 UK Family Expenditure Survey.     

Precautionary savings under income uncertainty: a cross-sectional analysis

The first part of this paper derives a closed fro solution for present consumption as a function of current and expected economic variables, which contains a precautionary component that is directly affected by future income risk. An estimating equation forthe structural relationship between savings and their determinants is discussed and tested using cross-sectional data from the 1984 UK Family Expenditure Survey.     

Video game demand in Japan: a household data analysis

Various economic studies of the video game industry have focused on intra-industry details. This article complements the approach by highlighting broader budget allocation by households. Using the ‘total households’ data of the Family Income and Expenditure Survey, this article estimates the demand model for video games. Estimation results show the effects of household income and demographic factors and prices of goods on the expenditure share of video games. These results indicate the importance of explicitly considering a households' budget allocation, or at least, including information on households.     

A generalization to QUAIDS

Previous research shows that consumers’ response to price and income changes is heterogeneous. In addition, evidence from national data often does not support the classical assumption of one commodity-one price. This paper introduces a data coherent generalization to the quadratic form of the almost ideal demand system (g-QUAIDS) that incorporates the sources of heterogeneity in the demand function and allows for regional price variation. Aggregation over consumers imposes a linearization to the g-QUAIDS that requires a new set of price indices. The results from an empirical study by using microdata from the Household Income and Expenditure Survey of Iran highlight the impact of aggregation bias in relation to the level of aggregation. An investigation of the predictive power of linear versus nonlinear g-QUAIDS in different aggregation levels provides practical recommendations for consumer demand analysis.     

Optimal Commodity Taxation in the Presence of Tourists

Abstract

This paper explores empirically whether Japanese consumers became more prudent in the second half of the 1990s, a decade in which Japan registered historically low economic growth. Employing the methodology developed by Dynan (1993), this study uses micro-level data from the Family Savings Survey and the Family Income and Expenditure Survey to estimate the coefficient of prudence for Japanese households in the second half of the 1990s. The estimates reveal that the coefficient of prudence is positive and statistically significant in the 1998–1999 period. The obtained value for the coefficient of prudence is four, which is much higher than that estimated for US households (not significantly different from zero) or UK households (around 2). The estimated coefficient for young households is higher still, which is consistent with simulation studies conducted by Gourinchas & Parker (2002) showing that precaution is the most important saving motive for younger households.     

Reviews

Book reviewed in this article:
Economic Survey. Australia. By O rganisation for E conomic C ooperation and D evelopment .
The Australian Economy: A Manual of Applied Economics. Edited by R. I. D owning .
The Australian Motor Industry. By P. S tubbs .
Company Mergers and Takeovers: How the Game is Played in Australia. By M. D octoroff .
Federal Finance: Intergovernmental Financial Relations in Australia since Federation. By R. L. M athews and W. R. C. J ay .
Government Influence and the Location of Economic Activity. Edited by G. J. R. L inge and P. J. R immer .
Introduction to Quantitative Methods in Economics. By D. E. J ames and C. D. T hrosby .
National Income, Expenditure and Output of the United Kingdom 1855–1965. By C. H. F einstein .     

Unequal we stand: An empirical analysis of economic inequality in the United States, 1967–2006

We conduct a systematic empirical study of cross-sectional inequality in the United States, integrating data from the Current Population Survey, the Panel Study of Income Dynamics, the Consumer Expenditure Survey, and the Survey of Consumer Finances. In order to understand how different dimensions of inequality are related via choices, markets, and institutions, we follow the mapping suggested by the household budget constraint from individual wages to individual earnings, to household earnings, to disposable income, and, ultimately, to consumption and wealth. We document a continuous and sizable increase in wage inequality over the sample period. Changes in the distribution of hours worked sharpen the rise in earnings inequality before 1982, but mitigate its increase thereafter. Taxes and transfers compress the level of income inequality, especially at the bottom of the distribution, but have little effect on the overall trend. Finally, access to financial markets has limited both the level and growth of consumption inequality.     

CATHOLIC-PROTESTANT INCOME DIFFERENCES IN NORTHERN IRELAND

The purpose of this paper is to analyse income differences betweeen Catholic and Protestant families in Northern Ireland (NI) using Family Expenditure Survey micro-data. The paper's first conclusion is that there is much greater inequality within the Catholic and Protestant communities than there is between them. It's second conclusion, based upon econometric analysis of data for full-time employees, is that the lower mean income of Catholics, relative to Protestants, could be entirely explained in terms of different rates of reward attached to a given set of labour market characteristics.     

A Regional Analysis of the Impact of Trade and Foreign Direct Investment on Wages in Mexico, 1984–2000

The conventional Heckscher–Ohlin model of trade predicts an equalizing effect of trade on wages in developing countries abundant in less‐skilled labor. Contrary to these predictions, skill premiums and skill demand increased in Mexico following trade liberalization. “New” trade theories have offered several channels through which trade can increase relative wages and demand for skilled workers. One such channel is foreign direct investment and outsourcing. Using the Mexican Household Income and Expenditure Survey (ENIGH) covering 1984–2000, the author examines the relationship between the demand for skill and maquiladora employment across regions and states. In contrast to previous studies based on manufacturing data for the 1980s, little evidence is found that growth in maquiladora employment is positively related to the increase in relative wages or wage‐bill share of more educated workers.