Japanese households¡¯ disposable income has been increasing since 2015. However, the scale of the increase has been moderate mainly because a rise in spousal income driven by greater female labor force participation has been partially offset by declining working hours as a result of the growing number of part-time jobs. Higher tax payments and social security contributions have also exerted downward pressure on disposable income, which today remains below the 2000 level.
Interestingly, Japanese households facing a budget surplus have increasingly allocated it to both debt repayment ¡ª net of new loans ¡ª and bank deposit accumulation, thereby raising the share of non-debt households from around 57 percent in the early 2000s to 63 percent currently. Aging has also contributed to the proliferation of non-debt households. The disappearance of savings-based insurance products in the current low interest rate environment has reduced households¡¯ investment in insurance products, further accelerating debt repayment and adding to bank deposits.
By contrast, investment in securities has been limited. As a result, households appear to have become even more risk-averse over the past five years contrary to the Bank of Japan¡¯s intention to promote risk-taking behavior with massive unconventional monetary easing since 2013.
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