Estimating Compensation of Employees Based on Taxation Data

Abstract

In this paper, we develop a novel approach to estimate the compensation of employees as a portion of Japan's gross domestic income. The methodology is characterized by its extensive use of comprehensive taxation data, and all data used is publicly available. Our estimates turn out to be larger than the numbers in the official statistics, and the difference has been widening in recent years. In addition, the discrepancy of the two estimates for net lending/borrowing between non-financial and financial transactions accounts (in theory, they should be the same) shrinks when the former is recalculated based on our estimates, both for households and for corporations.