ESRI Discussion Paper Series No.350
Estimating Consumption Inequality in Japan over the Last Three Decades
Abstract
This study investigates consumption inequality in Japan over the last three decades using data from the Family Income and Expenditure Survey (FIES). A number of scholars have argued that the consumption data in the FIES are biased, suggesting that respondents underreport spending on rarely purchased but expensive goods and that the reporting of consumption declines over the sixmonth survey period due to “survey fatigue.” This study therefore controls for these possible biases and then estimates consumption inequality. When consumption inequality between the top and bottom 10 percent of the income distribution is calculated using the raw, reported consumption data in the FIES, a downward trend in consumption inequality is obtained, implying that it has become more equal than in the past. However, when controlling the measurement error in the consumption, an upward trend in consumption inequality is found, implying that inequality has been rising.
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page1Abstract

page21. Introduction

page42. Consumption Inequality and Income Inequality

page53. Measurement Errors in Japanese Consumption Data

page74. Data

page85. Estimation Method

page126. Estimation Results

page157. Trends in Income, Consumption, and Estimated Consumption Inequalities

page168. Robustness Check A: Using Another Definition for the Consumption Variable

page179. Robustness Check 2: Using Only Goods Categories for Which the Elasticity is Identical for the Top and Bottom Income Groups

page1910. Conclusion

page20Reference

page22Tables

page22Table 1: Summary Statistics of Household Demographics

page22Table 2: Summary Statistics of Annual Income in the Previous Year (in Million Yen)

page23Table 3: Summary Statistics of Monthly Consumption of Each Goods Category (1,000 Yen)

page24Table 4: Estimated Expenditure Elasticities for Each Goods Category

page25Table 5: Estimated Consumption Inequality and Measurement Error

page26Table 6: Estimated Expenditure Elasticity for Each Goods Category Using Alternative Definition of Total Consumption

page27Table 7: Robustness Check 1: Estimated Consumption Inequality and Measurement Error

page28Table 8: Robustness Check 2: Estimated Consumption Inequality and Measurement Error


page29Figures

page29Figure 1: Trends in Income Inequality, Consumption Inequality, and Estimated Consumption Inequality
