WP Global Economy 2018.03.12
Industrialization is a key to economic development and overall income growth. Industrialization, however, does not increase all people's income equally. Income inequality tends to expand in the early phase of economic development, as illustrated by the "Kuznets Curve." Furthermore, growing literature on social mobility suggest social mobility may be lower in the period. We aim to contribute with the newly constructed individual-level intergenerational data from early twentieth century Japan under industrialization. Our data include not only income tax data but also detailed data on biographical background. Using the data, we investigate the mechanisms of income distribution and its intergenerational mobility under early stage of economic development. Our results show that the new opportunities of working on business under the industrialization provided people chances to grow rich, although the existing old social order remained.