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The Depressing Effect of Agricultural Institutions on the Prewar Japanese Economy

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  • Fumio Hayashi
  • Edward C. Prescott

Abstract

Why didn't the Japanese miracle take place before World War II? The culprit we identify is a barrier that kept prewar agricultural employment constant. Using a standard neoclassical two-sector growth model, we show that the barrier-induced sectoral distortion and an ensuring lack of capital accumulation account well for the depressed output level. Without the barrier, Japan's prewar GNP per worker would have been at least about a half of that of the United States, not about a third as in the data. The labor barrier existed because, we argue, the prewar patriarchy forced the son designated as heir to stay in agriculture. (c) 2008 by The University of Chicago. All rights reserved..

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Bibliographic Info

Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 116 (2008)
Issue (Month): 4 (08)
Pages: 573-632

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Handle: RePEc:ucp:jpolec:v:116:y:2008:i:4:p:573-632

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Web page: http://www.journals.uchicago.edu/JPE/

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  1. Echevarria, Cristina, 1997. "Changes in Sectoral Composition Associated with Economic Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 38(2), pages 431-52, May.
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  9. R. Anton Braun & Toshihiro Okada & Nao Sudo, 2008. "U.S. R&D and Japanese Medium Term Cycles," Discussion Paper Series 43, School of Economics, Kwansei Gakuin University, revised Oct 2008.
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