Fair Income and Redistribution :As the Case of Japan

There are several discussions over growing income inequality. However, to what extent is income inequality socially acceptable in a society?

Recent literature has proposed an inequality measuring structure that allows for alternative viewpoints of what is a fair income distribution. Almas et.al (2011) used “responsibility-sensitive theories of justice” for measuring “fair” income distribution.

There are significant differences in preference for redistribution by government. Alesina & Angeletos(2003) revealed that this difference reflects how society believes that effort determines individual income.

The system of income security and economic opportunity that draws the altruism and reciprocity from us should reward those who are poor and those who work socially valued but under-valued in market. Thus this policy designing should start by identifying those actions that people entitle others to reciprocation. 

The purpose of this paper is to contribute to ongoing discussion by measuring the difference between fair income and the attitude to what extent people believe individual effort can determine income: by relying on the Japan Household Panel Survey (JHPS) from Luxemburg Income Study Database.

Studying Japan as case study can generalize the current literature and lay the foundations for future study on re-thinking the system of income security. This result could be useful to propose optimal taxation considering not only personal responsibility also social responsibility.