This paper presents an empirical result on the relation between social capital and economic inequality in Japan based upon prefecture-by-prefecture data together with a summary of both normative and empirical studies in the past. In this study, I carried out an analysis based on a data set provided by social capital surveys of the Cabinet Office of the Japanese Government. Data on twelve elements of social capital covering social contacts, trust, and community participation by 47 prefectures are compiled. The relation between each of these twelve elements and the income/wealth gap gauged by Gini coefficients on annual household income, amount of household savings, value of real estate held by households, and the value of durable goods owned by households, are examined. The analysis shows strong inverse correlations between community participation indices and income/wealth gaps. Higher inequality is associated with lower community participation. In addition, wealth gaps are more strongly correlated with social capital elements than the income gap. Although causalities are not clear yet, these results suggest the importance of social capital in policy making related to income/wealth distributions. A widening income/wealth gap may be undesirable because it may deteriorate the quality of social capital, especially people’s daily contacts.

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This article examines the impact of different types of voluntary associations and activities in Japan, both independent and neighborhood associations, as social network or core elements of social capital, which operate to improve social performance including crime, health, educational achievement, child birth, and employment. The impact of both is examined with regard to the formation of trust and norms of reciprocity generating social capital. Based on prefectural panel data, this analysis indicates that traditional neighborhood associations variables are significantly associated with positive outcomes of crime, health, educational achievement, child birth and employment, as compared with modern independent associations, such as NPOs. The research also indicates that NPOs are associated with positive outcomes concerning contemporary diverse social problems.

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The purpose of this paper is to explain the current state and the nature of financial problems of the Japanese NPO sector using financial data analysis which covers 12,509 NPO financial statements. Japanese NPOs were defined as being in the birthing stage, and as such, were mostly concerned with cash flow problems. Analysis of NPO financial data focusing on the cash flow revealed that the both small and big NPOs kept a rather good financial ratio. However, further analysis found that that ratio was possible to preserve as a result of low salaries, expenditures and borrowing from board members and other related members. The managers of NPOs empirically recognize that they have to keep certain amount of cash and liquid asset for their sustainability.

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