The Depressing Effect of Agricultural Institutions on the Prewar Japanese Economy
AbstractThe question we address in this paper is why the Japanese miracle didn't take place until after World War II. For much of the pre-WWII period, Japan's real GNP per worker was not much more than a third of that of the U.S., with falling capital intensity. We argue that its major cause is a barrier that kept agricultural employment constant at about 14 million throughout the prewar period. In our two-sector neoclassical growth model, the barrier-induced sectoral mis-allocation of labor and a resulting disincentive for capital accumulation account well for the depressed output level. Were it not for the barrier, Japan's prewar GNP per worker would have been close to a half of the U.S. The labor barrier existed because, we argue, the prewar patriarchy, armed with paternalistic clauses in the prewar Civil Code, forced the son designated as heir to stay in agriculture.
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Date of creation: Mar 2006
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Other versions of this item:
- Fumio Hayashi & Edward C. Prescott, 2008. "The Depressing Effect of Agricultural Institutions on the Prewar Japanese Economy," Journal of Political Economy, University of Chicago Press, vol. 116(4), pages 573-632, 08.
- E1 - Macroeconomics and Monetary Economics - - General Aggregative Models
- O1 - Economic Development, Technological Change, and Growth - - Economic Development
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- N3 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy
This paper has been announced in the following NEP Reports:
- NEP-AGR-2006-03-11 (Agricultural Economics)
- NEP-ALL-2006-03-11 (All new papers)
- NEP-DEV-2006-03-11 (Development)
- NEP-DGE-2006-03-11 (Dynamic General Equilibrium)
- NEP-HIS-2006-03-11 (Business, Economic & Financial History)
- NEP-MAC-2006-03-11 (Macroeconomics)
- NEP-SEA-2006-03-11 (South East Asia)
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