A RESEARCH ON TECHNOGIES, EMPLOYMENT AND INCOME DISTRIBUTIONS IN THE MEDIUM-RUN MACROECOMICS

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Our research investigates the mechanism of the movements of labor shares in Japanese economy, and particularly clarifies the phenomena since late 90's, implying rising income inequalities and declining aggregate labor shares. Specifically, we investigate the effects of demand for goods, deregulations in goods and labor markets, skill-biased technical change and capital accumulation and explore the role of asymmetries of factor substitutabilities between capital, skilled and unskilled labor. Especially, we explore the role of capital-skill complementarity structure which implies that the elasticity of substitution between capital and unskilled labor is larger than that between capital and skilled labor capturing one specific aspect of the newly technological progress in the production side in the medium and the long run perspective.We show that in the imperfect competitive market framework having Keynesian and classical features, income inequalities between skilled and unskilled labor c … More ountercyclically move and aggregate labor shares procyclically fluctuate under capital-skill complementarity structure. This means that in recession, income inequalities enlarge and aggregate labor shares decline. Furthermore, deregulations in the goods and labor markets are likely to create widening income inequalities and declining labor shares. We also shows that even in the competitive market framework, under some capital-skill complementarity structures, income inequalities enlarge and aggregate labor shares decline in the process of skill-biased technical change and capital accumulation. When labor mobility occurs, however, capital accumulation reinforces rising income inequalities and declining aggregate labor shares. Moreover we demonstrate that in labor mobility case, capital-sill complementarity structures are likely to enlarge aggregate elasticity of substitution between capital and overall labor which tends to promote per capita income in the steady state in the growing economy. Less