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We study the effect of inequality on growth in an overlapping generations (OLG) model where inequality affects growth through accumulation of human capital and endogenous fertility. In contrast to much of the existing literature, we argue that the effect of inequality on growth might be non‐monotonic. Our model suggests that the effect depends on the demographic stage of development: inequality impedes growth in low‐fertility (high human capital) economies, but enhances growth in high‐fertility (low human capital) economies. Our finding casts doubt on a “double bonus” from reducing inequality in developing countries which are typically characterized by high fertility. (JEL O40, J13, O15)

Many studies find a negative effect of nonnative English speaking instructors on students' performance in universities where the language of instruction is English. However, the negative effect observed in the existing literature is not found in the study by Fleisher, Hashimoto and Weinberg (2002), which uses the sample of instructors who received training in the Ohio State University's PhD programme. In many economics departments in Australia, mainly because their PhD programmes are not large enough, it is unrealistic to have all the tutors trained in the methods recommended in Fleisher, Hashimoto and Weinberg (2002). This gives rise to a potential negative impact of non-native English speaking tutors on students' performance. Nevertheless, by analysing the panel data drawn from first-year quantitative methods, microeconomics and macroeconomics courses in an Australian university, we find no statistically significant difference in the effectiveness of small class teaching between native and non-native English speaking tutors.

Progress has been made in economic reform under the "Abenomics" first (monetary policy) and second (taxation reform) "arrows". The third, which emphasises structural reforms, has been more politically difficult, thus far yielding mixed results. This paper explores the gains that are possible from the labour market, tax and competition reforms embodied in the third arrow program. Economic rents and industry concentration levels are first identified from Nikkei firm specific data and used to construct an economy-wide model that represents oligopoly behaviour and its regulation explicitly. The analysis finds that modest gains in efficiency are available labour growth and, when it is accompanied by corporate governance reform, the switch between company and consumption taxation. Larger gains are shown to be available from active competition policy and, particularly, from productivity enhancing FDI in services. Central to the results is that a resurgent Japanese economy requires efficiency improvements that raise home rates of return and rebalance its large home and foreign asset portfolio toward home investment and capital growth.

We analyse the amakudari practice in Japan focussing on the banking industry where officials from the regulatory authority obtain post-retirement jobs in private banks. A theoretical model is developed to investigate a new role that amakudari might play following the introduction of limited deposit insurance in 2005. It is generally expected that changing deposit insurance from full to limited will discipline Japanese banks' risk-taking behaviour because depositors will start monitoring their banks. However, our game-theoretic analysis suggests the possibility that this disciplinary effect could be reversed by the new role that amakudari may play. We assume that depositors are unsure about banks' riskiness and infer their riskiness from observing whether or not they hire amakudari officials, i.e. these amakudari officials play a crucial role as a signal to depositors. This signal, however, might malfunction. We show that, in order to create more postretirement employment opportunities for their officials, the regulatory authority may weaken prudential regulation. Ironically and unexpectedly, the introduction of limited deposit insurance may make the whole banking industry riskier.