Description

We assess the ongoing reform efforts in Japan in terms of inclusive growth. We use
prefectural level panel data to regress a measure of inclusive growth, which incorporates
both average income growth and income inequality, on macroeconomic and policy
variables. Our analysis suggests that achieving the Bank of Japan’s 2 percent inflation
target has a positive effect on average income growth, but an adverse effect on income
equality. The package of structural reforms planned under Abenomics is found to be
effective in increasing both average income growth and income equality. The main policy
implication of our analysis is that full implementation of structural reforms– especially
labor market reforms–is necessary to both foster growth and increase equality.

More publications in this series: Working Papers

More publications by: Chie Aoyagi ; Giovanni Ganelli ; Kentaro Murayama