Japanese Corporate Savings and Saving-Investment Balance

In this paper, we examine the recent behavior of Japanese corporate savings, paying attention to its impact on private sector saving and the domestic saving-investment balance. We start with the argument made by the previous study that the global decline of labor share led to the global decline of corporate savings as the benchmark. We closely examine the relationship between Japanese labor share and corporate savings in recent years and found that there is no long-term declining trend in labor share. The timing of the fluctuations of two variables also do not coincide. The high level of corporate savings in Japan is mainly attributable to the trends in property income of the private non-financial corporate sector, including（1）lower interest payments due to the reduction of interest-bearing debt from the end of the 1900s to the mid 2000s, （2）a temporary decrease in dividend payments after the Lehman shock, and（3）the recovery of corporate profits from the beginning of the 2010s. We also examine these issues using Financial Statements Statistics of Corporations by Industry（Houjin-Kigyo Tokei）grouped by enterprise size, and find that fluctuations in labor share and corporate savings at the aggregate level are mainly caused by fluctuations in these variables for the largest enterprises.