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Estimating economic unfairness in Japan and policies toward fairness

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Abstract

Pre-tax income is affected by non-responsibility factors beyond an individual’s control and responsibility factors beyond an individual’s control; they could be defined as “situational” and “effort” valuables. If decreased pre-tax income derives from factors not attributable to individuals, such decline should be socially compensated. This debate is known as “responsibility-sensitive egalitarian theory”, which has been applied to empirical analysis in economics to identify causes of inequality. A wage gap between men and women has been observed in Japan for a long time; however, the gender variable has rarely been considered. Based on the “responsible egalitarian theory”, we estimate inequality using panel data from the Japanese Community Survey of Living Conditions (2010–2013), focusing on (1) gender and (2) age. This paper conduct three analyses: firstly, this paper estimate labour income using the panel data and examine the effects of situational and effort variables. Secondly, this paper considers how gender, regional differences, and educational achievement differ by using the results to estimate fair income. When we show the fair income difference in terms of the current age group, we find a difference in fair income between men and women and that the deviation from fair income to current income is more considerable for women. Lastly, by constructing a differenced based Lorenz curve, it seems that the type of unfairness differs by gender.

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Notes

  1. This description of Dworkin’s concept of resources is given by Romer [2].

  2. Besides Sen [10].

  3. They showed the result from the dictator game where the distribution phase is preceded by a production phase, because fairness must be understood in situations involving production.

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Acknowledgements

We appreciate helpful suggestions from two anonymous reviewers. We express our heartfelt gratitude to Professor Tsukasa Matsuura (Chuo University) for valuable comments on 19th International Conference of Japan Economic Policy Association. The data for this analysis, “Survey on Local Living Conditions and Well-being”, was provided by Professor Toshiaki Tachibanaki, the director of Life Risk Research Center at Doshisha University. This work was supported by JSPS KAKENHI Grant Number 22243028 and 19J00811. 

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  1. Japan Society for the Promotion of Science and Kyoto University, Kyoto, Japan

    Sayaka Sakoda

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Appendix

Appendix

This data includes both single and married sample, and the breakdown of each marital status is described in Tables and Figures (Table 7).

Table 7 Descriptive statistics of marital status
Full size table

In Japan, married women tend to leave the workforce due to marriage, pregnancy, or childbirth and then work as part-time workers. It is well recognized this sample selection causes bias in OLS, it is helpful to use the estimated inverse Mills ratio induced by Heckman two-stage estimation.

Hereafter, this appendix section focus on those who are unmarried to obtain robust results. Tables 8 and 9 shows the descriptive statistics of used variables. Before moving to explain the results, the following sentences describe two major differences from the analysis with the sample, including married people. Both differences are for unmarried women. The first is that the reference for Occupation is Manager, a regular worker for unmarried women. The other is that reference of current residence is the city with over a million people (Tables 10 and 11).

Table 8 Descriptive statistics (unmarried male)
Full size table
Table 9 Descriptive statistics (unmarried female)
Full size table
Table 10 Results of labour income estimation by RSE using panel data (single male)
Full size table
Table 11 Results of labour income estimation by RSE using panel data (single female)
Full size table

The interpretation of the bottom of the graph indicates that the movement is reversed from current income < fair income for the earlier income levels to current income > fair income for the later income levels. Considering the bottom is getting shallower, the analysis restricted to unmarried female shows much fair income distribution rather than the analysis including married (Figs. 5, 6, 7 and 8).

Fig. 5
figure 5

Comparison of current work income and fair income (unmarried males)

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Fig. 6
figure 6

Comparison of current work income and fair income (unmarried females)

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Current

Model 1

Model 2

Model 3

Total

5.71

6.20

6.16

6.19

Difference

 

0.49

0.44

0.48

Fig. 7
figure 7

Unfair Lorenz curve of unmarried male (from left to right, model 1, model 2, model 3)

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Current

Model 1

Model 2

Model 3

Total

5.37

5.96

5.79

5.88

Difference

 

0.58

0.42

0.51

Fig. 8
figure 8

Unfair Lorenz curve of unmarried female (from left to right, model 1, model 2, model 3)

Full size image

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Sakoda, S. Estimating economic unfairness in Japan and policies toward fairness. IJEPS 16, 85–111 (2022). https://doi.org/10.1007/s42495-021-00070-5

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