This article examines long‐term labour productivity change in Japan from the early seventeenth century to the nineteenth century. We constructed sectoral labour force estimates based on the methodology presented in a previous study, who provided a sectoral GDP series covering the Tokugawa period. Our results show the industrial structure in the Tokugawa period remained relatively stable in comparison with the economy after the Meiji Restoration. Nevertheless, the estimates of sectoral labour productivity suggest expansion of the market economy in Tokugawa Japan influenced the development of industrialisation after the Meiji Restoration.

After the Meiji Restoration of 1868, Japan modernized its institutions and economic growth gradually picked up. Growth accelerated especially during the so-called high-speed growth era from 1955 to 1970, when Japan rapidly caught up with Western economies. The long-term sustained high-speed growth recorded during this period was unprecedented, not only in Japan, but worldwide. Using newly constructed Hitotsubashi estimates of Japan’s historical gross domestic product (GDP) statistics and a growth accounting framework, we analyze the sources of Japan’s economic growth through a historical perspective covering the longer period than other studies and explore why Japan was not able to accomplish such high-speed growth from 1885 to 1955. Since the mid-1960s the primary sector accounted for a large share of economic activity, we use a two-sector model in which the economy overall is divided into the primary sector and the non-primary sector. Our results suggest that TFP growth and capital accumulation in the non-primary sector played a major role in achieving high-speed economic growth. From this perspective, the fact that the capital stock per worker did not grow substantially before World War II is one of the key reasons why Japan did not experience high-speed growth during this period.

This study presents growth account for Japan for the 130 years from 1885 to 2015 based on the measurement of labor quality simultaneously taking the effects of education and the allocation of labor across industries into account. The estimation results indicate that, over the 130 years, Japan's labor productivity rose 46-fold, with increases in the capital-labor ratio accounting for 40 percent of this rise, improvements in labor quality for 35 percent, and TFP growth for 36 percent. Looking at the periods before and after World War II separately, we found that labor productivity growth accelerated substantially in the postwar period and was twice as high as in the prewar period. This difference in labor productivity growth can be explained by differences in the sources of growth: while growth during the prewar period was driven mainly by improvements in labor quality (with a growth contribution of 37 percent), during the postwar period increases in the capital-labor ratio and TFP growth made the largest contribution (38 percent and 35 percent, respectively).

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