Migration, Employment, and Industrial Development in Japan

Abstract

Industrial development in Japan is accompanied by massive migration from agricultural to industrial areas. In a modified Harrod-Domar model, this paper compares two steady states, the first and the second, which emerge before and after the termination of such migration, respectively. Then, the paper shows that employment rates must be lower in the second steady state. Further, by examining the effects of fiscal policy, the paper shows that the balanced budget multiplier exceeds unity, and fiscal policy raises households’ disposable income and consumption.