43rd Congress of the European Regional Science Association: "Peripheries, Centres, and Spatial Development in the New Europe", 27th - 30th August 2003, Jyväskylä, Finland
In his seminal work on national development and regional inequality, Williamson (1965) predicts that regional income inequality will pass through three distinct phases as a nation moves through the early development stages to maturity. In the early stages of economic development, regional income inequality will increase, largely because of the disequilibrating effects of factor mobility. This will be followed by a period of stability, characterized by a relatively high level of inequality between regions. Finally, a lessening of regional inequality will set in as the national economy matures and equilibrating forces take effect. This overall process, if plotted against national economic development, will result in a bell-shaped or inverted U-shapes curve. The early stages of development are also associated with rapid urbanization, though with a shift toward population dispersion as the economy matures. Other stylized facts in the process of development include industrialization, demographic transition, and changing inequality of income among population subgroups (Alonso, 1980). The concentration of population in and around large cities is usually accompanied by an increase in regional income inequality. Some researchers have argued that this population concentration and concurrent increase in regional inequality does not impede economic development, and may in fact favor it. Nonetheless, many national governments have introduced policies of balanced regional development. The main objective of this paper is to measure regional income inequality in the post-war Japan using Williamson's weighted coefficient of variation. Based on prefectural population and GDP data, it investigates longer-term trends in regional income inequality. A sectoral decomposition analysis is also performed to examine the extent to which each industrial sector contributes to the overall weighted coefficient of variation. We hope to gain a deeper understanding of the relationship between national development, industrialization, and regional inequalities in the post-war Japan.