How Landownership Equality Created a Low Wage Society: Pre-industrial Japan, 1600-1870

Despite its sophistication, Early Modern Japan, 1600-1868, had among the lowest real wage levels ever recorded, half of those in pre-industrial England. This paper resolves this puzzle by considering the more equal landownership distribution in Japan relative to Europe. Due to institutional differences in land transmission, most of the rural population were landless in England but only 16% in Japan circa 1800. Using a Malthusian model, I show landownership equality in Japan paradoxically generated lower wages and GDP per capita. This is due to the concavity in the positive income-fertility curve resulting in greater equality generating greater population pressures. I provide evidence of the mechanism at the cross-country level and at the individual level using Japanese village censuses. If, as many historians believe, high wages in western Europe explain the onset of the Industrial Revolution, then Japan’s failure to industrialize first could have been shaped by its unusual pre-industrial equality.