Selected Issues Papers

Japan’s unemployment rate remains relatively low compared to other OECD countries. However, Japan’s poverty rate among the working-age population is one of the higher ones among OECD countries. The public assistance program in Japan does not provide adequate income support for the working poor and creates inherent work disincentives. In this context, the Earned Income Tax Credit (EITC) warrants consideration to strengthen the social safety net and relieve poverty of the working poor in Japan. This paper provides an overview of the theoretical and practical issues of EITC, aiming to support its potential introduction in Japan.