This study presents growth account for Japan for the 130 years from 1885 to 2015 based on the measurement of labor quality simultaneously taking the effects of education and the allocation of labor across industries into account. The estimation results indicate that, over the 130 years, Japan's labor productivity rose 46-fold, with increases in the capital-labor ratio accounting for 39 percent of this rise, improvements in labor quality for 25 percent, and TFP growth for 36 percent. Looking at the periods before and after World War II separately, we found that labor productivity growth accelerated substantially in the postwar period and was twice as high as in the prewar period. This difference in labor productivity growth can be explained by differences in the sources of growth: while growth during the prewar period was driven mainly by improvements in labor quality with a growth contribution of 37 percent, during the postwar period increases in the capital-labor ratio and TFP growth made the largest contribution (42 percent and 39 percent, respectively).
