Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/172901
Authors: 
Braun, R. Anton
Nakajima, Tomoyuki
Year of Publication: 
2016
Series/Report no.: 
Working Paper No. 2016-4
Abstract: 
Japan is in the midst of a protracted spell of depressed economic activity. Japan's economic stagnation has occurred against a background of rising earnings risk. Occupational stability is falling as routine occupations disappear and implicit lifetime employment guarantees are gradually disappearing. At the same time, earnings in some high-skilled occupations have continued to grow. The resulting polarization in earnings has been accompanied by an increase in wealth inequality. This paper develops a framework that relates these observations. In our model, an increase in uninsured earnings risk depresses output and increases wealth inequality. We then analyze the efficacy of alternative fiscal measures in terms of their ability to increase economic activity, reduce wealth inequality, and improve welfare. A reduction in the tax rate on capital achieves all of these objectives.
Subjects: 
economic stagnation
wage polarization
wealth inequality
JEL: 
E13
E16
D31
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.