Democratization and the development of Japan's uneven welfare state

Abstract

Comparative data reveal that Japan consistently has had one of the highest poverty rates among advanced industrialized nations, yet its government taxes the poor more heavily and gives them less in public cash transfers than its peers. Why does a country, endowed with democratic institutions, deep pockets, and a sizable social welfare system provide so little public assistance to the poor? I identify two features of Japan's political and economic development that gave rise to a distinctively threadbare safety net. First, the country's late-developer status paired with state-led industrial development incentivized the primary interest groups-namely, the agrarian landlords, industrialists, and organized labor-to oppose redistribution. Second, the manner in which democratic institutions were introduced in the late nineteenth century and the subsequent expansion of suffrage enabled these groups to gain political influence and block expansion of poor relief in the Diet. Beyond formulating redistributive policies, they locked in the minimalist pattern of redistribution by denying the poor the right to vote (pre-1945) and adopting an electoral system that muted their political voice after suffrage was obtained (post-1945). Consequently, Japan's welfare state developed unevenly, featuring a heavy layer of social insurance programs that benefit well-organized interest groups and an exceptionally minimalist public assistance program for the poor. Thus, contrary to extant theories that associate democracy, economic modernization, and a robust labor movement with higher social spending for the poor, I show that these factors stifled redistribution in the case of Japan. My findings strongly suggest that how a country built its democracy and wealth influences whether a welfare state reinforces or ameliorates existing inequality.