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It's Not Structural Change, but Domestic Demand: Productivity Growth in Japan

Author

Listed:
  • Akira Kohsaka

    (Professor, School of International Studies, Kwansei Gakuin University)

  • Jun-ichi Shinkai

    (Specially Appointed Researcher, Osaka School of International Public Policy, Osaka University)

Abstract

This paper examines the role of structural change in productivity growth in Japan, focusing on her recent "lost decades", with reference to the United States. Japan is now known to have a sharp slowdown in productivity growth in the 1990s, when we find a slowdown in intra-industry productivity growth is the main cause. We also find that the contribution of inter-industry reallocation of employment is almost zero in the 1990s and even significantly negative in the 2000s. Interestingly, the same holds true in the US, too. We will argue that structural change or the lack of it may not be responsible for the lost decades in Japan, and that these contrasting outcomes between Japan and the US come from a common factor.

Suggested Citation

  • Akira Kohsaka & Jun-ichi Shinkai, 2013. "It's Not Structural Change, but Domestic Demand: Productivity Growth in Japan," OSIPP Discussion Paper 13E005, Osaka School of International Public Policy, Osaka University.
  • Handle: RePEc:osp:wpaper:13e005
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    File URL: http://www.osipp.osaka-u.ac.jp/archives/DP/2013/DP2013E005.pdf
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    References listed on IDEAS

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    1. Fumio Hayashi & Edward C. Prescott, 2004. "The 1990s in Japan: a lost decade," Chapters,in: The Economics of an Ageing Population, chapter 2 Edward Elgar Publishing.
    2. Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
    3. Kyoji Fukao & Tsutomu Miyagawa & Hak Kil Pyo & Keun Hee Rhee, 2012. "Estimates of Total Factor Productivity, the Contribution of ICT, and Resource Reallocation Effects in Japan and Korea," Chapters,in: Industrial Productivity in Europe, chapter 9 Edward Elgar Publishing.
    4. Kyoji Fukao & Hyeog Ug Kwon, 2006. "Why Did Japan'S Tfp Growth Slow Down In The Lost Decade? An Empirical Analysis Based On Firm-Level Data Of Manufacturing Firms," The Japanese Economic Review, Japanese Economic Association, vol. 57(2), pages 195-228.
    5. Margaret S. McMillan & Dani Rodrik, 2011. "Globalization, Structural Change and Productivity Growth," NBER Working Papers 17143, National Bureau of Economic Research, Inc.
    6. Benjamin N. Dennis & Talan Iscan, 2007. "Accounting for Structural Change: Evidence from Two Centuries of U.S. Data," Department of Economics at Dalhousie University working papers archive account7, Dalhousie, Department of Economics.
    7. Dale Jorgenson & Koji Nomura, 2007. "The Industry Origins of the US-Japan Productivity Gap," Economic Systems Research, Taylor & Francis Journals, vol. 19(3), pages 315-341.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Japan's lost decades; productivity growth; structural change;

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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