Date of Award

Fall 2022

Document Type

Dissertation

Degree Name

Doctor of Philosophy (PhD)

Department

Economics

First Advisor

Mobarak, Mushfiq

Abstract

This thesis revolves around the research question of what policies contributed to Japan's economic growth, especially concerning the transition from an agrarian to an industrialized economy.Identifying such policies would help today's emerging economies accelerate the process of structural transformation. To answer this question, we first identify key policy areas and conduct a more in-depth investigation of selected policies. Our analysis to detect key policy areas consists of two parts.The first is a literature review on economic growth and industrial policy. A literature review on empirical analysis of Japan's economic growth using a growth accounting framework is in Chapter 1, and a literature review on industrial policy is in Chapter 2. The other is an analysis using wedge accounting to measure the efficiency of resource allocation across sectors, presented in Chapter 2. These analyzes show that labor market efficiency has a significant impact on the growth of the Japanese economy.We argue that the post-war growth acceleration was associated with labor market reforms for young rural workers, resulting in a significant reallocation of the labor force from agriculture to non-agriculture. Moreover, to our knowledge, no existing studies have examined labor market institutions in detail. Chapter 3 thoroughly examines Japan's labor market legal system and policies from the beginning of modernization to postwar reforms.The review highlights that government support and control expanded since the onset of modernization, peaking in wartime mobilization, and that postwar reforms built on the legacy of wartime labor conscription. Nevertheless, we argue that the post-war labor market, characterized by expanding public employment agencies and cooperating with schools, provided career opportunities for rural youth. The discussion of labor market legislation contributes to the existing literature on institutional analysis of the Japanese economy because these studies also paid little attention to the labor market. Our analysis suggests the significance of labor market policies for structural transformation and, more specifically, the need to upgrade institutions to keep pace with advances in production technology.The slow growth before 1940, especially in the 1920s and 1930s, may be due to the imbalance between production technology and labor market institution. In other words, manufacturing production technology has improved, but the labor market has changed little, and this mismatch has hindered the efficient reallocation of labor from rural to urban manufacturing. Our discussion implies that governments should invest in institutional infrastructure to maximize the benefits of adopting advanced production technologies.

Download

Share

COinS