<p>This paper investigates changes in income inequality among Japanese youth, specifically the “Employment Ice Age Generation.” Using Shapley income decomposition by income sources, we found that the labor income of the household head and the household head’s spouse contributed positively to income inequality, while the contributions of other household members reduced income inequality, effectively offsetting inequality between 1989 and 2004. However, per-worker income inequality widened during this period. The Oaxaca–Blinder decomposition of income distribution reveals that the 2004 cohort had higher household and equivalized income than the 1989 cohort but lower per-worker income. Changes in household structure are the main factor in the overall changes in income distribution and inequality. This shift has influenced income changes over time, reducing income inequality by lowering the upper end of the income distribution. Moreover, non-regular employment has decreased inequality by boosting the lower end of the income distribution, potentially minimizing income inequality. Additionally, shifts in occupation and industry have contributed to income growth in the lower end of the distribution.</p>