abstract

Did the structural reforms under the Koizumi Administration worsen the regional income disparity and bring about economic stagnation in rural areas? If so, was the widening of the regional inequality a crucial factor that toppled the LDP out of power? Using municipal-level income data from 1973 to 2008, I provide descriptive information to evaluate these key questions linking structural reforms and the subsequent electoral performance of the party in power. The empirical analyses reveal four main findings: (1) income inequality across regions increased since around 2000. (2) The growing income disparity in the last decade coincided with the stagnation of the rural areas. Small-sized municipalities had lower growth rates than larger ones. (3) Though not conclusive, there are pieces of information suggesting that the stagnation of the rural areas is due in part to the cutback of transfers from the national to local governments. (4) Finally, the LDP-led coalition’s vote shares in small-sized municipalities decreased in the 2005 and 2009 Lower House elections. The decrease in the per capita income was associated with the decrease in the ruling coalition’s vote shares.