This chapter provides an overview of Abenomics’ effects on financial markets and the real economy, with a focus on the effect of monetary policy. While many financial and real economic indicators showed success, consumption growth was sluggish. Household-level data from the Family Income and Expenditure Survey suggest that this is in part because monetary policy did not have the predicted expansionary effect on household consumption, even for those households expected to benefit most.

The March 11, 2011, Great Tohoku Earthquake and Tsunami led to a nuclear meltdown at the Fukushima Daiichi nuclear plant, leading many observers to predict a major transformation of Japanese energy policy. However, since the 2012 election of Prime Minister Shinzo Abe, Japan has restarted its nuclear reactors, weakened subsidies for renewable energy, and submitted emissions reduction goals under the Paris Agreement widely criticized as insufficient and reliant on accounting gimmicks. Under what we call Abenergynomics, Abe used energy policy as a tool to support the economic growth objectives of Abenomics, even when the associated policies were publicly unpopular, opposed by utility companies, or harmful to the environment. We show how Abenergynomics shaped Japanese policy toward nuclear power, electricity deregulation, renewable energy, and global climate change negotiations.

Since 2012, Shinzo Abe has become the most successful prime minister in LDP history. This chapter analyzes the secrets to his success. We find first that Abe did not win by increasing the LDP vote nor by proposing popular policies. The main reason for Abe’s success is opposition fragmentation. The failure of the DPJ during its three-year stint in power meant that the LDP was virtually guaranteed to win the 2012 election under any circumstance. He also employed legislative and media strategies that minimized the presence of his adversaries in news reporting. It was difficult for people to evaluate Abe critically, as dissent against him was tactically silenced. Abe maintained high cabinet support, but the main reason given for that support is the absence of an alternative. All of this suggests that the LDP predominance established by Abe will be harder for this successors to maintain.

This chapter demonstrates how a series of institutional reforms since 1994 have transformed the Japanese prime minister’s relationship with other actors in the Japanese parliamentary system and expanded his power. His power grew in terms of discretion in making ministerial appointments as well as policy formulation capacities. It further discloses that his power has grown even more since the formation of the second Abe administration in 2012 because of such opportunities as the civil service reform of 2014.

The Abe government pursued ambitious national security reforms in response to Japan’s rapidly changing strategic environment. This chapter surveys institutional and defense policy reforms achieved, including further centralization of Japan’s policy decision-making in the executive; significant shifts to defense posture; expanded emphasis on the USA–Japan alliance as the “cornerstone” of territorial security and regional peace and stability; and more extensive security ties with third countries. In keeping with this volume’s unifying theme – whether the Abe government represents a “major turning point” in Japan’s postwar trajectory – this chapter also assesses the practical significance of reforms and identifies the enabling and constraining factors likely to shape any future adjustments.

The second administration of Prime Minister Shinzo Abe that took power in 2012 changed course from a neoliberal program of maximizing employer flexibility to cut labor costs to a more social democratic policy of improving employee welfare to boost labor participation and productivity. Abe and his advisors did so not due to any ideological conversion but rather as a pragmatic response to the marketplace shift from labor surplus to labor shortage. They embraced policies to support a higher birthrate; increase the workforce, especially among women and the elderly; make workers feel more secure; and raise wages to increase disposable income. This culminated in the “Work Style Reform” (hatarakikata kaikaku) legislation of 2018, which limited overtime hours and promoted more equal pay for equal work. Progressives certainly hoped for bolder reforms, but the policy shift nonetheless altered some Japanese labor practices.

This chapter takes some well-known observations about the structure of the Japanese labor market and adds new evidence about how it has evolved to study inflation in Japan. Our key finding is that labor market dynamics shifted after 1998 so that correlations between labor market tightness and wages weakened noticeably. This change was accompanied by a break in the relationship between wages and prices, so wage inflation has become a much less important determinant of price inflation.

This chapter asks whether the Abe administration’s “third arrow” of structural reforms was useful in fostering innovation and strengthening the global competitiveness of Japan’s economy. It takes the Silicon Valley model and evaluates how much the third arrow of Abenomics added flexibility to some of the core institutions of Japan’s traditional model by pushing toward or adding institutional elements of the Silicon Valley model. The goal for Japan should not be piecemeal adoption but instead strengthening the institutional underpinnings that enable Japan’s startup ecosystem to flourish and coexist with the large-firm-dominated model. This chapter concludes that Abenomics’ third arrow legitimized the institutions supporting Japan’s startup ecosystem by amplifying trajectories of change already underway – not by forcing change in areas that were headed in a different direction. Since institutions supporting the startup ecosystem are emerging in parallel to the existing institutional configuration, the legitimacy provided by Abenomics’ third arrow reforms do represent positive developments and policy for helping innovation in Japan’s economy.

This chapter examines how industry-level markups evolved over the period of Abenomics. Prior to Abenomics during the global financial crisis, the aggregate markups in the manufacturing sector declined by 3.6 percent from 2006 to 2009 and bounced back by 3.2 percent from 2009 to 2012. The fall and rise of productivities contributed the most to the U-shape recovery of manufacturing markups. Over the Abenomics period (2012–2015), markups increased more in the manufacturing sector than in the service sector, and the rise in output prices was responsible for this trend. We discuss some suggestive implications why the first arrow of Abenomics – aggressive monetary policy – effectively improved manufacturing industries’ markups. In a global economic environment where Japanese firms compete with foreign firms, depreciation of the yen eases global price competition and improves their profitability in terms of the yen.

This chapter uses Japanese governmental microdata, the Labor Force Survey and the Basic Survey on Wage Structure, to look at the change in the gender wage gap and in the probability of females becoming managers. I found a higher probability of females becoming managers during the Abe administration, though there is still a large gap in promotion to management.