Hostname: page-component-76fb5796d-45l2p Total loading time: 0 Render date: 2024-04-27T09:30:52.212Z Has data issue: false hasContentIssue false
  • English
  • Français

Consumption Smoothing in the Working-Class Households of Interwar Japan

Published online by Cambridge University Press:  21 February 2024

Kota Ogasawara
Kota Ogasawara*
Affiliation:
Associate Professor, Tokyo Institute of Technology - Department of Industrial Engineering and Economics, 2-12-1, Ookayama, Meguro-ku, Tokyo 152-8550, Japan.
*
E-mail: ogasawara.k.ab@m.titech.ac.jp.
Get access Rights & Permissions [Opens in a new window]

Abstract

I analyze factory worker households in the early 1920s in Osaka to examine idiosyncratic income shocks and consumption. Using the household-level monthly panel dataset, I find that while households could not fully cope with idiosyncratic income shocks at that time, they mitigated fluctuations in indispensable consumption during economic hardship. In terms of risk-coping mechanisms, I find suggestive evidence that savings institutions helped mitigate vulnerabilities and that both using borrowing institutions and adjusting labor supply served as risk-coping strategies among households with less savings.

Type
Article
Information
The Journal of Economic History , Volume 84 , Issue 1 , March 2024 , pp. 111 - 148
Copyright
© The Author(s), 2024. Published by Cambridge University Press on behalf of the Economic History Association

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

I wish to thank Dan Bogart, Bishnupriya Gupta, Peter Lindert, Kazushige Matsuda, Stefan Öberg, Tetsuji Okazaki, Sakari Saaritsa, Eric Schneider, Masayuki Tanimoto, Ken Yamada, Elise van Nederveen Meerkerk, Hans-Joachim Voth, and the four anonymous referees. I would also like to thank the seminar participants at the University of Tokyo; Montréal; Massachusetts Institute of Technology; and Paris School of Economics for their helpful comments. I thank Ryo Nagaya for research assistance. There are no conflicts of interest to declare.

References

REFERENCES

Attanasio, Orazio P., and Davis, Steven J.. “Relative Wage Movements and the Distribution of Consumption.” Journal of Political Economy 104, no. 6 (1996): 1227–62.Google Scholar
Attanasio, Orazio P., and Krutikova, Sonya. “Consumption Insurance in Networks with Asymmetric Information: Evidence from Tanzania.” Journal of European Economic Association 18, no. 4 (2020): 1589–618.Google Scholar
Attanasio, Orazio P., and Pistaferri, Luigi. “Consumption Inequality.” Journal of Economic Perspective 30, no. 2 (2016): 3–28.Google Scholar
Baines, Dudley, and Johnson, Paul. “Did They Jump or Were They Pushed? The Exit of Older Men from the London Labor Market, 1929–1931.” Journal of Economic History 59, no. 4 (1999): 949–71.Google Scholar
Bassino, Jean-Pascal. “Inequality in Japan (1892–1941): Physical Stature, Income, and Health.” Economics & Human Biology 4, no. 1 (2006): 62–88.Google Scholar
Blundell, Richard, Pistaferri, Luigi, and Preston, Ian. “Consumption Inequality and Partial Insurance.” American Economic Review 98, no. 5 (2008): 1887–921.Google Scholar
Bowblis, John R. “The Decline in Infant Death Rates, 1878–1913: The Role of Early Sickness Insurance Programs.” Journal of Economic History 70, no. 1 (2010): 221–32.Google Scholar
Boyer, George R. “Poor Relief, Informal Assistance, and Short Time during the Lancashire Cotton Famine.” Explorations in Economic History 34, no. 1 (1997): 56–76.Google Scholar
Carroll, Christopher D. “Buffer-Stock Saving and the Life Cycle/Permanent Income Hypothesis.” Quarterly Journal of Economics 112, no. 1 (1997): 1–55.Google Scholar
Carroll, Christopher D., Dynan, Karen E., and Krane, Spencer D.. “Unemployment Risk and Precautionary Wealth: Evidence from Households’ Balance Sheets.” Review of Economics and Statistics 85, no. 3 (2003): 586–604.Google Scholar
Chimoto, Akiko. “Urbanization and Women’s Participation Rate: Analysis of the Census of 1920.” [in Japanese] Dōshisha Shōgaku 63, no. 5 (2012): 642–62.Google Scholar
Cochrane, John H. “A Simple Test of Consumption Insurance.” Journal of Political Economy 99, no. 5 (1991): 957–76.Google Scholar
Deaton, Angus. “Saving and Liquidity Constraints.” Econometrica 59, no. 5 (1991): 1221–48.Google Scholar
Deaton, Angus. Understanding Consumption. New York: Oxford University Press, 1992.Google Scholar
Dercon, Stefan. Insurance Against Poverty. New York: Oxford University Press, 2004.Google Scholar
Dercon, Stefan, and Krishnan, Pramila. “In Sickness and in Health: Risk Sharing within Households in Rural Ethiopia.” Journal of Political Economy 108, no. 4 (2002): 688–727.Google Scholar
di Matteo, Livio, and Herbert Emery, J. C.. “Wealth and the Demand for Life Insurance: Evidence from Ontario, 1892.” Explorations in Economic History 39, no. 4 (2002): 446–69.Google Scholar
Emery, J. C. Herbert. “‘Un-American’ or Unnecessary? America’s Rejection of Compulsory Government Health Insurance in the Progressive Era.” Explorations in Economic History 47, no. 1 (2010): 68–81.Google Scholar
Fafchamps, Marcel, and Lund, Susan. “Risk-Sharing Networks in Rural Philippines.” Journal of Development Economics 71, no. 2 (2003): 261–87.Google Scholar
Fafchamps, Marcel, Udry, Christopher, and Czukas, Katherine. “Drought and Saving in West Africa: Are Livestock a Buffer Stock?” Journal of Development Economics 55, no. 2 (1998): 273–305.Google Scholar
Foster, Andrew D. “Prices, Credit Markets and Child Growth in Low-Income Rural Areas.” Economic Journal 105, no. 430 (1995): 551–70.Google Scholar
Francks, Penelope. “Kimono Fashion: The Consumer and the Growth of the Textile Industry in Pre-War Japan.” In The Historical Consumer: Consumption and Everyday Life in Japan, 1850–2000, edited by Francks, Penelope and Hunter, Janet, 158–75. New York: Palgrave Macmillan, 2012.Google Scholar
Gertler, Paul, and Gruber, Jonathan. “Insuring Consumption against Illness.” American Economic Review 92, no. 1 (2002): 51–70.Google Scholar
Godo, Yoshihisa. “Economic Growth and Education Stocks in East Asia.” [in Japanese] Keizai Kenkyū 64, no. 1 (2013): 30–41.Google Scholar
Heckman, James. “Sample Selection Bias as a Specification Error.” Econometrica 47, no. 1 (1979): 153–61.Google Scholar
Hijikata, Sonoko. School and Community in Prewar Japan. [in Japanese] Tokyo: University of Tokyo Press, 1994.Google Scholar
Hijikata, Sonoko. Public, Private, Charity Schools in Modern Tokyo. [in Japanese] Tokyo: University of Tokyo Press, 2002.Google Scholar
Honoré, Bo E. “Trimmed LAD and Least Squares Estimation of Truncated and Censored Regression Models with Fixed Effects.” Econometrica 60, no. 3 (1992): 533–65.Google Scholar
Horrell, Sara, and Oxley, Deborah. “Work and Prudence: Household Responses to Income Variation in Nineteenth-Century Britain.” European Review of Economic History 4, no. 1 (2000): 27–57.Google Scholar
Hyodo, Tsutomu. The Evolution of Labor-Capital Relations in Japan. [in Japanese] Tokyo: University of Tokyo Press, 1971.Google Scholar
Inoue, Tatsuki. “The Role of Pawnshops in Risk Coping in Early Twentieth-Century Japan.” Financial History Review 28, no. 3 (2021): 1–25.Google Scholar
James, John A., and Suto, Isao. “Early Twentieth-Century Japanese Worker Saving: Precautionary Behaviour before a Social Safety Net.” Cliometrica 5, no. 1 (2011): 1–25.Google Scholar
Kantor, Shawn E., and Fishback, Price V.. “Precautionary Saving, Insurance, and the Origins of Workers’ Compensation.” Journal of Political Economy 104, no. 2 (1996): 419–42.Google Scholar
Kase, Kazutoshi. “A Study of Proposals of Unemployment Insurance Schemes in Pre-war Japan.” [in Japanese] Shakai Kagaku Kenkyū 58 (2006): 125–55.Google Scholar
Kato, Yuriko. “Rental House Management on Leased Land in Prewar Japan.” [in Japanese] Aoyama Gakuin Jyoshi Tanki Daigaku Kiyō 44 (1990): 79–94.Google Scholar
Kiesling, Lynne L. “Institutional Choice Matters: The Poor Law and Implicit Labor Contracts in Victorian Lancashire.” Explorations in Economic History 33, no. 1 (1996): 65–85.Google Scholar
Lewis, Karen K. “What Can Explain the Apparent Lack of International Consumption Risk Sharing?” Journal of Political Economy 104, no. 2 (1996): 267–97.Google Scholar
Mace, Barbara J. “Full Insurance in the Presence of Aggregate Uncertainty.” Journal of Political Economy 99, no. 5 (1991): 928–56.Google Scholar
Meyer, Bruce D., and Sullivan, James X.. “Consumption and Income Inequality in the U.S. since the 1960s.” NBER Working Paper No. 23655, Cambridge, MA, August 2017.Google Scholar
Moehling, Carolyn M. “Women’s Work and Men’s Unemployment.” Journal of Economic History 61, no. 4 (2001): 926–49.Google Scholar
Moriguchi, Chiaki. “The Evolution of Employment Relations in U.S. and Japanese Manufacturing Firms, 1900–1960: A Comparative Historical and Institutional Analysis.” NBER Working Paper No. 7939, Cambridge, MA, October 2000.Google Scholar
Moriguchi, Chiaki. “Implicit Contracts, the Great Depression, and Institutional Change: A Comparative Analysis of U.S. and Japanese Employment Relations, 1920–1940.” Journal of Economic History 63, no. 3 (2003): 625–65.Google Scholar
Munshi, Kaivan, and Rosenzweig, Mark. “Networks and Misallocation: Insurance, Migration, and the Rural-Urban Wage Gap.” American Economic Review 106, no. 1 (2016): 46–98.Google Scholar
Murhem, Sofia. “Credit for the Poor: The Decline of Pawnbroking 1880–1930.” European Review of Economic History 20, no. 2 (2015): 198–214.Google Scholar
Naidu, Suresh, and Yuchtman, Noam. “Coercive Contract Enforcement: Law and the Labor Market in Nineteenth Century Industrial Britain.” American Economic Review 103, no. 1 (2013): 107–44.Google Scholar
Nakagawa, Kiyoshi. A City Lower Layer of Japan. [in Japanese] Tokyo: Keisō Shobō, 1985.Google Scholar
Nakamura, Takafusa. Analysis of Interwar Japanese Economy. [in Japanese] Tokyo: Yamakawa Shuppan, 1981.Google Scholar
Nakamura, Takafusa, and Odaka, Konosuke. “Overview.” [in Japanese] In Dual-Structure, edited by Nakamura, Takafusa and Odaka, Konosuke, 1–80. Tokyo: Iwanami Shoten, 1989.Google Scholar
Nelson, Julie A. “On Testing for Full Insurance Using Consumer Expenditure Survey Data.” Journal of Political Economy 102, no. 2 (1994): 384–94.Google Scholar
Öberg, Stefan. “Did the Poor Pay More? Income-Related Variations in Diet and Food Quality among Urban Households in Sweden 1913–1914.” Rivista Di Storia Economica 32, no. 2 (2016): 211–48.Google Scholar
Odaka, Konosuke. “Japanese-Style Labour Relations.” In The Japanese Economic System and Its Historical Origins, edited by Okazaki, Tetsuji and Okuno-Fujiwara, Masahiro, Ch. 5. Oxford: Oxford University Press, 1999.Google Scholar
Ogasawara, Kota. Replication files for “Consumption Smoothing in the Working-Class Households of Interwar Japan.” Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2022-09-20. https://doi.org/10.3886/E180281V1 Google Scholar
Okado, Masakatsu. What Did School Education Bring to Children? Tokyo: Aoki Shoten, 2000.Google Scholar
Okazaki, Tetsuji. “Selection, Exits and Efficiency in the Japanese Banking Industry: An Historical Perspective.” [in Japanese] In Strategy for the Financial Revitalization in Japan, edited by Saito, Makoto, 230–31. Chūō Keizai Sha, 2002.Google Scholar
Ono, Hiroshi. Economic History of Living Space. [in Japanese] Tokyo: Nihon Keizai Hyōron Sha, 1999.Google Scholar
Persaud, Alexander. “Escaping Local Risk by Entering Indentureship: Evidence from Nineteenth-Century Indian Migration.” Journal of Economic History 79, no. 2 (2019): 447–76.Google Scholar
Ravallion, Martin, and Chaudhuri, Shubham. “Risk and Insurance in Village India: Comment.” Econometrica 65, no. 1 (1997): 171–84.Google Scholar
Rose, Elaina. “Consumption Smoothing and Excess Female Mortality in Rural India.” Review of Economics and Statistics 81, no. 1 (1999): 41–49.Google Scholar
Rosenzweig, Mark R. “Risk, Implicit Contracts and the Family in Rural Areas of Low-Income Countries.” Economic Journal 98, no. 393 (1988): 1148–70.Google Scholar
Saaritsa, Sakari. “The Poverty of Solidarity: The Size and Structure of Informal Income Smoothing among Worker Households in Helsinki, 1928.” Scandinavian Economic History Review 59, no. 2 (2011): 102–27.Google Scholar
Saito, Hiroshi. Shichiyashi no kenkyū [in Japanese] Tokyo: Shin Hyōron, 1989.Google Scholar
Saito, Osamu. “Child Labor in Modern Japan” [in Japanese] Keizai Kenkyū 46, no. 3 (1995): 216–29.Google Scholar
Saito, Osamu. “Children’s Work, Industrialism, and the Family Economy in Japan.” In Child Labor in Historical Perspective 1800–1985: Case Studies from Europe, Japan, and Colombia, edited by Hugh Cunningham and Pier Paolo Viazzo, 73–90. Florence: UNICEF, 1996.Google Scholar
Schneider, Eric B., and Ogasawara, Kota. “Disease and Child Growth in Industrializing Japan: Critical Windows and the Growth Pattern, 1917–39.” Explorations in Economic History 69 (2018): 64–80.CrossRefGoogle Scholar
Scott, Peter M., and Walker, James. “Working-Class Household Consumption Smoothing in Interwar Britain.” Journal of Economic History 72, no. 3 (2012): 797–825.CrossRefGoogle Scholar
Shibuya, Ryuichi. Development and Structure of Usuries. [in Japanese] Tokyo: Nihon Tosho Center, 2000.Google Scholar
Shibuya, Ryuichi, Suzuki, Kameji, and Ishiyama, Shojiro. Pawn Shops in Japan. [in Japanese] Tokyo: Waseda University Press, 1982.Google Scholar
Skoufias, Emmanuel, and Quisumbing, Agnes R.. “Consumption Insurance and Vulnerability to Poverty: A Synthesis of the Evidence from Bangladesh, Ethiopia, Mali, Mexico, and Russia.” European Journal of Development Research 17 no. 1 (2005): 24–58.Google Scholar
Taira, Koji. Economic Development and the Labor Market in Japan. New York and London: Columbia University Press, 1970.Google Scholar
Takeda, Haruhito. “Business Cycle and Economic Policy.” [in Japanese] In Japanese Economic History, Vol. 3, edited by Kanji, Ishii, Akira, Hara, and Haruhito, Takeda, 1–51. Tokyo: University of Tokyo Press, 2002.Google Scholar
Tanaka, Hikaru. “Postal Savings and Mass Saving Behavior in the Early 20th Century: A Case Study of Mishima City in Shizuoka Prefecture.” [in Japanese] Rekishi to Keizai 54, no. 2 (2012): 16–31.Google Scholar
Townsend, Robert M. “Risk and Insurance in Village India.” Econometrica 62, no. 3 (1994): 539–91.Google Scholar
Townsend, Robert M. “Consumption Insurance: An Evaluation of Risk-Bearing Systems in Low-Income Economies.” Journal of Economic Perspectives 9 no. 3 (1995): 83–102.Google Scholar
World Bank. The East Asian Miracle: Economic Growth and Public Policy. New York: Oxford University Press, 1993.Google Scholar
Yazawa, Hirotake. Income Distribution and Family Economy in Modern Japan. [in Japanese]. Tokyo: Nihon Tosho Center, 2004.Google Scholar

DOCUMENTS

Division, Banks, Secretariat of Finance Ministry. Mujin ni kansuru chōsa (Survey on Mutual Loan), [in Japanese] Tokyo: Banks Division, Secretariat of Finance Ministry, 1915.Google Scholar
Bank of Japan. Nihonginkō hyakunenshi, dai ikkan (The Hundred Year History of the Bank of Japan, Source Material, Vol. 1). [in Japanese] Tokyo: Bank of Japan, 1986.Google Scholar
Bank of Japan. Shichiya ni kansuru chōsa (Survey on Pawnbroking), [in Japanese] Tokyo: Bank of Japan, 1913.Google Scholar
Bureau of Social Welfare. Shokkō seikei jyōtai chōsa (Survey of Living Conditions of Factory Workers). [in Japanese] Tokyo: Bureau of Social Welfare, 1923.Google Scholar
Bolt, Jutta and Luiten van Zanden, Jan. (2020). Maddison Project Database, version 2020. https://www.rug.nl/ggdc/historicaldevelopment/maddison/publications/wp15.pdf (accessed on 5 October 2021).Google Scholar
Department of Social Affairs, Osaka City Office. Rodō chōsa hōkoku, dai nijyūnishū (Report of Labor Research, Series 22). [in Japanese] Kyoto: Koubundou Shobō, 1923.Google Scholar
Ichiro, Fuji. Gakkō keiei no jissai (School Administration). [in Japanese] Fukuoka, 1925.Google Scholar
Municipal Bureau of Labor Research of Osaka. “Rodō chōsa hōkoku, dai ni, yon, go, hachishū (Report of Labor Research, Series 2, 4, 5, and 8).” [in Japanese] In Taishō kakei chōsa shūsei (Collection of Household Budget Surveys in the Taisho Era)}, edited by Tada, Yoshizo. Tokyo: Seishi Sha, 1919–1920.Google Scholar
Municipal Bureau of Labor Research of Osaka. “Rodō chōsa hōkoku, dai jyusshū (Report of Labor Research, Series 10), Cost of Living among Laborers in Osaka, Japan.” [in Japanese] In Taishō kakei chōsa shūsei (Collection of Household Budget Surveys in the Taisho Era), edited by Tada, Yoshizo. Tokyo: Seishi Sha, 1921.Google Scholar
Osaka City Office. “Shichiya ni kansuru chōsa (Survey on Pawn Shops).” [in Japanese] In Report of Labor Research, Series 4, edited by Municipal Bureau of Labor Research of Osaka. Osaka: Osaka City Office, 1920.Google Scholar
Osaka City Office. Osakashi tōkeisho, Taishō hachinen (Statistical Table of Osaka City, 1919 Edition). [in Japanese] Osaka: Osaka City Office, 1921.Google Scholar
Osaka City Office. Osakashi tōkeisho, Taishō kyūnen (Statistical Table of Osaka City, 1920 Edition). [in Japanese] Osaka: Osaka City Office, 1922.Google Scholar
Osaka City Office. Shichiya to kanekashigyō (Pawn Shop and Money Lending Business.) [in Japanese] Osaka: Osaka City Office, 1926.Google Scholar
Osaka City Office. Osakashi tōkeisho, Shōwa ichinen (Statistical Table of Osaka City, 1926 Edition). [in Japanese] Osaka: Osaka City Office, 1927.Google Scholar
Osaka City Office. Osakashishi, dai yonkan (History of Osaka City, Vol. 4). [in Japanese] Tokyo: Osaka City Office, 1934.Google Scholar
Postal Savings Bureau. Chokinkyoku tōkei nenpō (Annual Statistical Report of Postal Savings Bureau, 1920 Edition). [in Japanese] Tokyo: Postal Savings Bureau, 1924.Google Scholar
Social Affairs Division. Chūtō kaikyū seikeihi chōsa (Survey of Living Conditions among Middle Class). [in Japanese] Tokyo: Social Affair Division, 1925.Google Scholar
Statistics Bureau of the Cabinet. Taishō kyūnen kokusei chōsa hōkoku, fuken no bu, dai sankan (Population Census of Japan, Osaka Prefecture, 1920 Edition). [in Japanese] Tokyo: Statistics Bureau of the Cabinet, 1925.Google Scholar
Statistics Bureau of the Cabinet. Taishō kyūnen kokusei chōsa hōkoku, zenkoku no bu, dai ikkan (Population Census of Japan, Vol. 1, 1920 Edition). [in Japanese] Tokyo: Statistics Bureau of the Cabinet, 1928.Google Scholar
Statistics Bureau of the Cabinet. Taoshō kyūnen kokuseichōsahōkoku, zenkoku no bu, dai nikan (Population Census of Japan, Vol. 2, 1920 Edition). [in Japanese] Tokyo: Statistics Bureau of the Cabinet, 1929a.Google Scholar
Statistics Bureau of the Cabinet. Taishō kyūnen kokusei chōsa hōkoku, zenkoku no bu, dai sankan (Population Census of Japan, Vol. 3, 1920 Edition). [in Japanese] Tokyo: Statistics Bureau of the Cabinet, 1929b.Google Scholar
Statistics Bureau of the Cabinet. Taishō kyūnen kokusei chōsa hōkoku, fuken no bu, dai ikkan (Population Census of Japan, Tokyo Prefecture, 1920 Edition). [in Japanese] Tokyo: Statistics Bureau of the Cabinet, 1929c.Google Scholar
Tada, Yoshizo. Taishō kakei chōsa shūsei, dai sankan (Collection of Household Budget Surveys in the Taisho Era, Vol. 3). [in Japanese] Tokyo: Seishi Sha, 1991a.Google Scholar
Tada, Yoshizo. Taishō kakei chōsa shūsei, dai yonkan (Collection of Household Budget Surveys in the Taisho Era, Vol. 4). [in Japanese] Tokyo: Seishi Sha, 1991b.Google Scholar
Supplementary material: PDF

Ogasawara supplementary material

Online Appendix

Download Ogasawara supplementary material(PDF)
PDF 984.7 KB