The leading industrial sector in Japan has given way to leadership of tertiary industries through progress of Japan's service-oriented and software-oriented economy and consequent transformation into a highly information based society. Japanese regions have endured severe regional disparities in economic growth since the collapse of the bubble economy. The revitalization of local economies has remained a crucial issue confronting Japan's government. An earlier study by the authors applied regional input-output analysis to examine trends in regional disparities of employment growth under Japan's service-oriented and software-oriented economy during 1985-1995. Results of empirical studies revealed that a rapid increase in inter-regional trade in business services and knowledge services was a major factor for regional disparities in employment growth. Although the Kanto region has shown high employment growth under the accumulation of business services and knowledge services, local regions have lost their economic vitality because of a lack of well-developed service industries. This study extends the study period to 1980-2000 and undertakes examination of regional employment growth before and after the bubble economy. Using structural decomposition analysis based on regional input-output, this study identifies factors of regional disparities in employment creation during 1980-1990 and 1990-2000. Results show that declining employment in processing and assembly industries accompanied by sharply increasing export-oriented service industries became a major factor for widening regional disparities after the collapse of the bubble economy. JEL Classification: C67, E24