long term employment (Odaka, 1967 p.50). Furthermore, duality existed in the manufacturing sector too. In general, “dual structure” of the Japanese economy began before the Second World War as seen in a widening of income differential between agricultural and non-agricultural. The widening income differential was due to two main reasons. Firstly, productivity differential widen as productivity in the industrial sector increases faster due to relative ease in technology borrowing than productivity in agriculture. Secondly, the existence of surplus labour in traditional industries has tended to hinder increases in productivity due to limited arable land for agriculture so the farmland area per worker increased very slightly. With reference to Table 1 (Appendix)(Hayami Y, 1997 p.173), the ratio of real labour productivity in agriculture to that of industry declined from 75% in 1885 to 24% in 1935. However, intersectoral terms of trade remained more or less stable hence the drop is mostly reflected in decreases in the ratio of agricultural income to that of non-agricultural from 76% to 38%. Although there were improvements in the ratio in the post-war period, it could partly be attributed to improvements in terms of trade due to protection policies and an increase in non-agricultural income for agricultural households.As for the ‘duality’ within the manufacturing sector, it emerged during the interwar period. Several factors namely: age, sex, education and training, work-status and scale of firm could contribute to such wage differentials. In the case of Japan, evidence had suggested that the scale of firm has been very important in Japan (Paine, 1971). As shown in Table 2 and 3 (Appendix), the general trend prior and after the Second World War were the larger the size of capital, higher the wages; the lower the labour productivity, lower the wages and lower the capital productivity, lower the wages. In all, ̵...
