Institute for Economic Studies, Keio University

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Income Inequality Decomposition by Income Source in Japan

Masato Shikata、Soichiro Tanaka

2017/12/27

JEL Classification codes : D31, H24, I38

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[ Abstract ]

Income Inequality Decomposition by Income Source in Japan In this study, we decompose income inequality in Japan by income source to analyze the changes in income distribution among working age people. The data used are from the National Survey of Income and Expenditure (Ministry of Internal Affairs and Communications Statistics Bureau). Our results show that changes in the earnings of both household heads and their spouses greatly increases income inequality, while earnings of other household members decrease income inequality. Changes in income tax burdens increase income inequality, while changes in social insurance premiums decrease income inequality. The effects of earnings of household heads and their spouses on income inequality are largely offset by changes in other income sources. As a result, increases in inequality in Japan remain small.