The middle class in Japan, 1994–2009: Trends and characteristics

Soichiro Tanaka、Masato Shikata
JEL Classification codes : D31,H24,I32
[ Abstract ]

In this study, we estimate the population shares of the Japanese middle class during 1994–2009 and discuss its characteristics. The middle class hovered around 65% (from 67.29% in 1994 to 65.21% in 2009) of the population, having 75–200% of each year’s median income. However, if we fix the income ranges of the middle class to the 1994 level, the middle class declined considerably to 59.47% in 2009, the upper class also declined, and the lower class and the poor increased. Thus, the stability of the middle class seems due to the overall decline in Japan’s income distribution. In addition, the population share of the middle class among the working population (18–64 years) is larger than that among the elderly population (≥ 65 years). Therefore, the middle class is in danger of shrinking further as the population continues ageing. Meanwhile, population ageing also affects redistributive policies: the share of social transfers of gross income is increasing and the redistributive effect of social security is growing. Additionally, despite declining income levels, there were no major changes in the share of income tax (including social insurance premiums) on gross income. This is, in fact, assumed to be due to factors such as increased social insurance rates.