By Dr. Christiaan Grootaert (auth.)
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Additional resources for The Relation Between Final Demand and Income Distribution: With Application to Japan
This is a substantial improvement over the approach necessitated in the case where only a one-way classification is available, viz. to estimate Engel functions (without dummy variables) across income groups, using, for example, functional forms (15) or (16). This approach pre- imposes a continuous function on the data, a continuity for which, we believe, there is no a priori reason. Our methodology allows for discontinuities of the function between income groups, since shifts in slope and curvature are permitted.
Income distribution in the salary and wsge earners group improved in prosperity years (1948, 1951) but worsened in recession years. inequality increased until 1961-62. inequality fell. From the mid-fifties income Subsequently, the trend was reversed, and From the late sixties on though an upward tendency of the Gini-coefficient has been noted again (Takahashi (1959), Ishizaki (1967), Mizoguchi (1975a, 1975b), Mizoguchi, Takayama and Terasaki (1977), Wada (1975». 1 shows the time pattern of the Japanese income distribution between 1954 and 1971.
This approach is roughly consistent with the "job competition" model in which job characteristics and vacancies (rather than formal education) are the basic determinants of market earnings. It implies the existence of heterogeneous labor skills which are assumed for the most part to be acquired on the job. Workers with 22 background characteristics which yield minimum expected training costs will be selected first. The job competition framework is relevant where on-the-job training is important, where strong seniority provisions exist, and where competitive forces in the labor market are weak so that relative wages are not very important in allocating labor (see Morley and Williamson, 1974).