Chiaki Moriguchi

The Evolution of Income Concentration in Japan, 1886-2005: Evidence from Income Tax Statistics

This paper studies the evolution of income concentration in Japan from 1886 to 2005 by constructing long-run series of top income shares and top wage income shares, using income tax statistics. We find that (i) income concentration was extremely high throughout the pre-WWII period during which the nation underwent rapid industrialization; (ii) a drastic de-concentration of income at the top took place in 19381945; (iii) income concentration remained low during the rest of the century but shows some sign of increase in the last decade; and (iv) top income composition in Japan has shifted dramatically from capital income to employment income over the course of the twentieth century. We attribute the precipitous fall in income concentration during WWII primarily to the collapse of capital income due to wartime regulations and inflation. We argue that the change in the institutional structure under the occupational reforms made the one-time income de-concentration difficult to reverse. In contrast to the sharp increase in wage income inequality observed in the United States since 1970, the top wage income shares in Japan have remained relatively stable over the last thirty years. We show that the change in technology or tax policies alone cannot account for the comparative experience of Japan and the United States. Instead we suggest that institutional factors such as internal labor markets and union structure are important determinants of wage income concentration.

Japanese Lifetime Employment: A Century's Perspective

This paper examines the origins and dynamic evolution of the lifetime employment system in Japan from the beginning of the 20th century to present. Based on the historical perspective developed in the paper, we derive implications to the future course of the Japanese employment system. In this paper, we view lifetime employment as an economic as well as social institution, characterized by an implicit contract and reciprocal exchange of trust, goodwill, and commitment between employers and workers. We argue that this institution emerged as an equilibrium outcome of the dynamic interactions among management, labor, and government and became an integral part of the nations employment system over the past hundred years, reinforced by complementary institutions such as state welfare policies, labor laws, corporate governance, social norms, family values, and education system. Based on our long-run historical analysis, we reevaluate the cost and benefit both in terms of economic and social of the lifetime employment system and explore the factors that determine its efficiency and stability. We emphasize the importance of understanding labor market conditions, technology and the nature of human capital, interactions between social and economic aspects of employment relations, and the role of complementary institutions. The paper concludes by assessing changes in these factors in the post-bubble period, offering some insights to the future course of the Japanese employment system.

Two-part marginal cost pricing in a pure fixed cost economy

Abstract Two-part marginal cost pricing is the pricing scheme where firms, in addition to the linear price equated to the marginal cost of production, charge non-uniform access fees to customers. Using a general equilibrium model with non-convex technologies, we examine the optimality and existence of this pricing scheme. First, it is shown that two-part marginal cost pricing is an optimal pricing regulation for monopolies when increasing returns to scale arise solely from the presence of fixed costs. Second, a sufficient condition for the existence of two-part marginal cost pricing equilibria is provided under the bounded losses condition. This generalizes the result of Brown et al.

The evolution of employment systems in the United States and Japan, 1900-1960 : a comparative historical and institutional analysis

By the early 1960s the employment relations pertaining to blue-collarworkers observed in large unionized manufacturing firms in the United States and Japan offered an intriguing contrast.l The employment relations that had developed in American establishments tended to be based on explicit, elaborate, and legalistic contracts between employers and craft-industrial unions. Employment practices were characterized by narrow job definitions, finely graded wages explicitly linked to job titles, low invesfrnent in employee training and education, promotions and layoffs based on well-defined seniority rules, and contractually established fringe benefits. Disputes over implementation and interpretation of the contracts were typically brought before a legal third party through a formal.grievance mechanism. By contrast, the employment relations observed in Japan tended to be based on implicit, informal, ild ambiguous contracts between employers and enterprise unions, which were internally enforcedthrough long-term interactions andreputational concerns. Employment practices typically incorporated broadly and ambiguously definedjobs, high firm-specific hu-* capital invesfinent, periodic wage raises and promotions bet crucially on the basis of subjective perfonnance evaluations, provision of avariety of company welfare benefits beyond and above legal obligations, and implicit employment guarantees for regular workers. Joint labor-management councils were widely used among the Japanese manufacturing establishments in order to facilitate prior consultation, and most disputes over the agreements were settled informally by negotiation within the firm, without appealing to a legal third pany. Starting from these observations, this dissertation explores the origins ofthe distinctive employment relations in the two countried from a comparative historical and institutional perspective.2 The dissertation consists oftwo parts. The first part develops a game-theoretic framework as a basis for a comparative historical analysis and proposes a hypothesis concerning the process of equilibrium selection. The second part offers an empirical analysis of the evolution of employment systems in the United States and Japan, ild establishes consistency between this hypothesis and the historical evidence. In particular, ihe comparative historical analysis documents contractually similar initial conditions in thetwo economies around 1900, parallel institutional developments duringthe 1910s and 1920s, and a subsequent process of bifurcation in the early 1930s, followed by a process of institutionalization.

Geopolitics and Asia's Little Divergence: A Comparative Analysis of State Building in China and Japan after 1850

We provide a new framework to account for the diverging paths of political development and state building in China and Japan during the second half of the nineteenth century. The arrival of Western powers not only brought opportunities to adopt new technologies, but also fundamentally threatened the national sovereignty of both Qing China and Tokugawa Japan. We argue that these threats produce an unambiguous tendency toward centralization and modernization for small states, but place conflicting demands on geographically larger states. We use our theory to study why China, which had been centralized for much of its history, experienced gradual disintegration upon the Western arrival, and how Japan, which had been politically fragmented for centuries, rapidly unified and modernized during the same period. To further demonstrate its validity, we also apply our model to other historical episodes of state building, such as the unification of Anglo-Saxon England in the tenth century and the rise of Muscovy during the fifteenth century.