Japan is often envisioned as an advanced country in which the living standards of the majority are identified as middle class. In fact, in a recent survey conducted in 2012, 92.3% of Japanese respondents classified themselves as such. There is a lack of awareness of income inequality and poverty in the society. In another survey addressing the current level of income inequality, only 71.5% stated it to be excessive, the lowest among advanced countries, but a disconnect exists in that Japan's poverty rate, which is related to income inequality, is the highest among advanced economies at 58.7%. In the September issue of the RIETI Report, we present Fellow Daigo Nakata's column "How Should Japan Address Socio-economic Inequality and Poverty?"
He tackles the obvious issue of Japan's social security policy failing as an income redistribution mechanism, which, under ideal conditions, is designed to ensure a degree of fairness even if income inequality widens due to economic fluctuations or changes in the demographic structure. With huge government debt and political battles, Japan faces a challenge to create an efficient social security system which can only be achieved by nothing extraordinary other than finding an efficient combination of social security benefits and taxes. Achieving this requires comprehensive statistical surveys which are important for the government to formulate policy based on the actual status of inequality and poverty. As such, Nakata discusses utilizing data from RIETI's JSTAR (Japanese Study of Aging and Retirement) project, a panel data survey of middle-aged and elderly people in Japan and in which the second wave is currently underway, to bring about research findings to contribute to the formation of tax and social security policies.
While income inequality and poverty have been subject to extensive media coverage and debate, public awareness of the problems has not increased in a comparable fashion. Japan used to be called a "society of 100 million middle class people," a cliché referring to the phenomenon of the vast majority of the Japanese population identifying themselves as belonging to the middle class. Actually, this phenomenon is continuing today. The 2012 Public Opinion Survey on the Life of the People conducted by the Cabinet Office found that 92.3% of the respondents considered themselves as belonging to the middle class in terms of living standards.