Within the Japanese society, there is a growing consensus that Japan is no longer an equal society but is a society of economic disparities. The objective of this study is to re-examine this view from a comparative historical perspective. Using long-run statistics, it documents the process by which Japan has become one of the most egalitarian societies among the developed economies over the period of high economic growth and remained so well into the 1990s. Importantly, the Japanese-style egalitarianism rests on equality in household income before government intervention and is based on the premises of (a) corporate provision of employment security and high human capital investment in full-time workers, (b) households headed by a male full-time worker and gender-based division of labor within household, and (c) family-based assistance of non-working individuals under limited public assistance. These fundamental premises, however, began to falter with rapid aging and drastic changes in household structure since the 1980s combined with prolonged economic stagnation since the 1990s. Recent rise in economic inequality in Japan is characterized by the lower middle class falling without the rich getting richer. In other words, the challenge faced by the Japanese society is not growing disparity but growing poverty and insufficient innovation.
