Income Inequalities in Japan and the UK: A Comparative Study of Two Island Economies

Abstract

This article builds on recent work entitled The Spirit Level by Richard Wilkinson and Kate Pickett suggesting that Japan is one of the most harmonious affluent countries in the world, whereas the United Kingdom (UK) is one of the most unequal and hence disharmonious. In particular, the article revisits The Spirit Level evidence according to which Japan is a more equitable society in terms of income than any other industrialised country, but especially contrasts with a country such as the UK. The article provides a brief review of appropriate data in both Japan and the UK that could be used for the analysis of income inequality and identifies the best available microdata that would be most suitable for this purpose: the Japanese National Survey of Family Income and Expenditure microdata and the UK Family Resources Survey and Household Below Average Income survey microdata. It then presents a comparative analysis of income inequality measures in Japan and the UK and a discussion of the income distribution in both countries based on these data sets over the past twenty years. The findings suggest that the UK is much more unequal than Japan in terms of income distribution.