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  6. Applications of the Inclusive Wealth Index in Japan (1):

Applications of the Inclusive Wealth Index in Japan (1):

Measurements of Human Capital and their Applications

June 2016

Senior Research Associate, Jue Yang


Whether our society can achieve sustainable development is an urgent issue of primary importance. In order to build a sustainable society, it is necessary to increase the utilization of the current generation on the premise that the needs of future generations not be impaired. An indicator named Inclusive Wealth Index (IWI) was widely adopted to assess the sustainability of society, because it integrally evaluates a society from economic, environmental and social dimensions. The IWI consists of human capital, manufactured capital, natural capital, and other forms of capital. This study focuses on one of the components, human capital, as its share is the highest of Japan’s inclusive wealth. The characteristics of human capital accumulation and spatiotemporal distribution change is analyzed, and based on the results, the sustainability of Japanese society is discussed and evaluated at the prefectural level. The main findings are 1) the net change in human capital and the per capita level of the country as a whole has been decreasing since 2000. In order to realize sustainable development, it is important to devise a multilayered policy centering on an increase in human capital. 2) Wide variations in regional levels became apparent, but a trend towards convergence was observed in recent years. 3) The decrease in human capital is highly likely a result of problems that are embedded in both industrial structure and labor policy. It is suggested that improving the industrial structure at the national and regional levels, and appropriate human capital induction through urban planning, are also essential for future wage stabilization and the improvement of the labor participation rate which can contribute to the increase/preservation of human capital.

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  • The full text of this report is not available in English.
    The original Japanese text is here (1.55 MB ).