This month's featured article
Technical Changes Can Reduce Inequalities
KOBAYASHI KeiichiroSenior Fellow
Widening income inequalities and population aging are problems not only for Japan but also for many countries around the world. I would like to examine the "self-restoring force" of the market economy, a mechanism in which such problems are alleviated by the working of market forces, using a long-term time frame spanning several decades. The starting point is the theory of directed technical change (DTC), which has been advocated by Professor Daron Acemoglu of the Massachusetts Institute of Technology (MIT) since the late 1990s.
Income inequalities in advanced countries began to widen in the 1970s. In Japan, this occurred in the 1980s and developed into a major social problem in the 2000s. According to a 2006 paper by MIT Professor David H. Autor and others, polarization of the labor market (see the Keywords section) has been taking place in the United States. However, this trend may not last forever.
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