Income inequality among older people in rapidly aging Japan

• Income inequality among households with elderly members overall decreased after the mid-1980s.
• A relatively large decrease in income inequality in elderly households from 1986 to 1995 occurred at the high-income groups.
• The decline in three-generation households lead to lowering the decline in income inequality among households with the elderly.
• Income inequality is largely determined by the income of non-elderly members who co-reside with the old parents.

This study examined the mechanisms by which income inequality among households with elderly members changed from the mid-1980s to the mid-2000s, focusing on the transformation of household structure and on income sources.The data that I analyze in this paper comes from the Comprehensive Survey of People's Living Conditions in Japan (CSLCJ) conducted by the Japan Ministry of Health, Labour and Welfare in the mid-1980s, the mid-1990s, and the mid-2000s.The main findings of this study can be summarized into the two points. First, income inequality among households with elderly members overall decreased after the mid-1980s. A relatively large decrease in income inequality in elderly households during the bubble economy in the mid-1980s and after its collapse through the early 1990s had occurred at the high-income groups. The examination of the extent of income inequality among the elderly found that household structure is a critical factor. The decline in three-generation households lead to lowering income inequality among households with the elderly.Second, in examining the change in income package of the households with the elderly, it was found out that economic inequality is largely determined by the income of non-elderly members who co-reside with the old parents. Such a phenomenon has not changed despite the large change in the household structure with the elderly members associated with fast transformation of the population since the mid-1980s.