On the consumption insurance effects of long-term care insurance in Japan: Evidence from micro-level household data

Using micro-level household data in the 2001 Comprehensive Survey of the Living Conditions of the People on Health and Welfare compiled by the Japanese Ministry of Health, Labor and Welfare, this paper examines how having a household member in need of long-term nursing care can result in welfare losses measured in terms of consumption. In so doing, this study evaluates the role of the public long-term care insurance scheme implemented in Japan in April 2000. The results indicate that when households include a disabled family member, household consumption net of long-term care costs do not decrease as much as before the introduction of long-term care insurance. Further, when compared with the surveys conducted in 1998, the adverse effects on consumption net of long-term care costs have become much weaker. These findings suggest that the introduction of social insurance in 2000 helped Japanese households to reduce the welfare losses associated with a disabled family member.     

Nonprofit/for-profit status and earning differentials in the Japanese at-home elderly care industry: Evidence from micro-level data on home helpers and staff nurses

In April 2000, Japan embarked on a reform of its health care market. Along with the introduction of a long-term care insurance scheme, the government for the first time allowed for-profit operators to compete head-on with non-profit operators in the provision of at-home care services. Taking advantage of a unique and rich micro-level survey, this study is the first to examine wage differentials between the nonprofit and the for-profit sectors in Japan's nursing care industry, concentrating on home helpers and staff nurses. Controlling for nonrandom unobserved selection biases, our results show that a nonprofit wage premium exists. This finding supports the hypothesis that nonprofit providers operate under non-distributional constraints. J. Japanese Int. Economies 21 (1) (2007) 106–120.     

Supplier density and at-home care use in Japan: Evidence from a micro-level survey on long-term care receivers

Following the introduction of the long-term care insurance scheme and deregulation of the market for at-home care services, Japan experienced a substantial increase in expenditure on care for the elderly. Using household-level survey data, we empirically examine whether the increase in care expenditure is associated with supplier density springing from the rise in the number of care providers following deregulation. We provide weak evidence that supplier density in the at-home care market is positively correlated with probability to use care or expenditure on care. Moreover, we find no link between the share of for-profit providers and the demand for at-home care services.     

The determinants of exit from institutions and the price elasticity of institutional care: Evidence from Japanese micro-level data

This study examines how the price mechanism affects the length of residents’ at institutions and their destination after exit. Using micro-level data from The Survey on Care Service Providers compiled by the Japanese government, we show that the price elasticity of the hazard of exit was 1.7 from welfare care facilities was 1.8 from health care facilities. Moreover, our estimates reveal that a 1 percentage point increase in copayments leads to an increase in the probability of returning home by 0.04% for residents of welfare care facilities and 3.7% for those of health care facilities and a decrease in the probability of being re-hospitalized by 3.3% for residents of health care facilities and 1.9% for those of medical care facilities. Our findings demonstrate that an appropriate price policy may work well to shorten clients’ length of stay and to reduce the number of the socially institutionalized.     

Bribery in Indonesia: some evidence from micro-level data

This paper outlines and tests a model in which firms seek to reduce the cost of taxes and regulatory compliance by offering bribes to government officials. It finds that firms' profitability (scaled by production costs) largely determines both the amounts paid and the time spent negotiating bribes with officials. Competition between arms of the bureaucracy for bribe income seems to be a result of decentralisation, but the analysis suggests that this competition would lead to a spreading of bribes among a larger number of officials rather than to a significant increase in their total amount. Local governments may be able to raise more revenue by reducing the number of taxes and regulations and using part of the increased revenue to raise the salaries of officials, while devoting more effort to restraining corrupt behaviour. But progress may be blocked by central government tax officials increasing their demands for bribes.     

Livelihood and care of the elderly: Determinants of public attitudes in Japan

This study analyses public attitudes towards the degree of government involvement in ensuring the livelihood and care of the elderly in Japan. Using four waves of individual-level annual data from the Japanese General Social Survey collected over the period 2000-2005, we estimate ordered logit models with various explanatory variables based on the socio-demographic, economic, political, and social background of the respondents. Many significant factors are common for both livelihood and care specifications, their effects being qualitatively the same and in line with our prior expectations. The estimation results also show positive coefficients of year intercept dummies, implying an increase in support of a government-based system over time. Further investigation shows that this trend is caused by those who favour government redistribution policies becoming increasingly more consistent in their support for a government-based social security system in Japan.     

Robots and industrial labor: Evidence from Japan

This paper provides one of the first studies of the impact of the introduction of robots to equilibrium labor demand in an entire economy. We use long-term (1979–2012) industry-level panel data from Japan, a country that is over 10 times as intensive in the use of robots as in the U.S. Our model, which is derived from Acemoglu and Restrepo (2017), shows that there are three effects on labor demand in the aggregate economy from the introduction of industrial robots. The first is the negative displacement effect of robots taking over the tasks of humans. The second is the positive industry productivity effect of robots lowering costs in a particular industry. This lowering of costs draws demand to the industry and expands output and employment in that industry. The third is the positive general equilibrium effect. Robots raise productivity and expands demand in all industries, thereby increasing the product and labor demand for the industry introducing the robots. In our estimation, we find that the displacement effect is insignificant, the productivity effect is sometimes positively significant, and the macroeconomic general equilibrium effect is always highly positively significant. Overall, the introduction of robots has been beneficial to the demand for labor in Japan. Our results are robust to various controls and instrumental variables.     

Family structure and home ownership: Evidence from China

This paper studies how individuals, particularly low-income individuals, have financed housing purchases since the housing market was privatized in urban China in the 1990s. To the surprise of many policy makers and economists, more than 80% of the households in urban China owned private housing by the end of 2010. In contrast to most developed countries, we find that male siblings are important borrowing resources to purchase housing. Conditional on the number of siblings, having more brothers instead of sisters increases the probability of owning housing among male individuals born during the baby boom (1949–1978) in urban China. However, there is no such brother effect for females. The brother effect is stronger for males with low income or low levels of education and is also stronger when brothers are wealthier. Our results are robust to different model specifications. Our results suggest that females are likely to be excluded from family-based informal financial market for housing purchase among baby boom generations in China.     

CEO compensation and firm performance in Japan: Evidence from new panel data on individual CEO pay

Prior studies on Japanese executive compensation have been constrained by the lack of longitudinal data on individual CEO pay. Using unique 10-year panel data on individual CEO's salary and bonus of Japanese firms from 1986 to 1995, we present the first estimates on pay-performance relations for Japanese CEO compensation. Specifically we find consistently that Japanese CEO's cash compensation is sensitive to firm performance (especially accounting measures), and that the “semi-elasticity” of CEO's cash compensation with respect to ROA is 1.3 to 1.4, which is in general agreement with prior estimates elsewhere. As such, our estimates do not support that Japanese corporate governance is unusually defunct with regard to the significance and size of the sensitivity of CEO compensation to accounting profitability. On the other hand, to be consistent with the literature on Japanese corporate governance that tends to downplay the role of shareholders and stress the role of banks and employees, we find that stock market performance tends to play a less important role in the determination of Japanese CEO compensation. Finally, we find that the bonus system makes CEO compensation more responsive to firm performance in Japan. The finding is in contrast to the literature on compensation for regular employees in Japan which often argues that bonus is a disguised base wage. J. Japanese Int. Economies 20 (1) (2006) 1–19.     

Thai manufacturing small and medium sized enterprise technical efficiency: Evidence from firm-level industrial census data

Thai manufacturing small and medium sized enterprises (SMEs) face intense competition in domestic and foreign markets. Given their importance to the economic development of the country it is important to have a clear understanding of their readiness to face the rigors of international competition, including the barriers and specific problems that they face. This study uses a stochastic frontier analysis (SFA) and technical inefficiency effects model to analyze the technical efficiency of Thai manufacturing SMEs and key factors impacting upon it. Analysis of cross-sectional data from a 2007 census of Thai manufacturing SMEs indicates that their weighted average technical efficiency is approximately 50 percent, signifying a high level of technical inefficiency which is reducing potential output. The inefficiency effects model reveals that firm size, firm age, skilled labor, ownership characteristics and location are firm-specific factors that significantly affect the technical inefficiency of production. Key measures to improve the technical efficiency of Thai manufacturing SMEs are an adequate supply of inputs, access to credit facilities, extensive infrastructural development and training programs for employees.     

Reputational Penalties in Japan: Evidence from Corporate Scandals

We examine incidents in which Japanese businesses are implicated in corporate scandals. Such firms suffer statistically significant losses in their market values. Given the negligible legal and regulatory penalties for Japanese companies, we interpret the results as convincing evidence on the magnitude of reputational losses. We also compare our results to those found in US studies. The average negative abnormal stock price reaction is larger in Japan than in the USA. Moreover, they are negative and statistically significant even when it is not obvious that the firm violated an implicit or explicit contract with the damaged party.     

The effects of the social norm on cigarette consumption: Evidence from Japan using panel data

Using Japan's prefecture-level panel data from 1989 to 2001, this paper examines the influence of the social norm on a person's smoking behavior when the complementary relationship between smoking and drinking is taken into account. The key findings through a dynamic panel model controlling for unobserved prefecture-specific fixed effects are as follows: (1) influence from others is stronger when people live more closely and cohesively. A tightly knit society results in a reduction of smoking through smoking-related interaction. (2) Smoking and drinking have a complementary relationship: greater initial consumption of alcohol results in larger consumption of cigarettes. (3) The complementary relationship between smoking and drinking is attenuated if the cost of committing the annoying conduct (i.e., smoking) is high.Overall, this empirical study provides evidence that the psychological effect of the presence of surrounding people has a direct significant effect upon smoking behavior and, furthermore, that it attenuates the complementary relationship between smoking and drinking, thereby reducing cigarette consumption. These results indicate that not only formal rules but also tacitly formed informal norms are effective deterrents to smoking.     

Wholesalers,indirect exports,geography, and economies of scope: Evidence from firm transaction data in Japan

This study examines wholesalers’ roles in manufacturers’ exports in Japan. First, it is shown that, like in the case of manufacturing sector, a productivity sorting on the overseas activities is also present in the case of wholesalers. Namely, only the most productive wholesaler firms can engage in foreign direct investment, and the next productive wholesaler firms can participate in export activities, and the least productive wholesaler firms do domestic transactions only. Second, we investigate how the wholesalers facilitate manufacturers’ export activities in the form of indirect exports. We have found that the wholesalers through which manufacturing firms indirectly export their goods are predominantly located in Tokyo or Osaka. The probability of indirect exports is negatively correlated with distance between manufacturers and wholesalers, but there are certain threshold distances at 300–500 kilometers, over which the chance of indirect exports turns null. Another notable finding is that wholesalers’ productivities have positive correlation with the chances of indirect exports whereas manufacturers’ productivities do not matter. The number of manufacturers from which a wholesaler purchases goods, is found to have a positive correlation with the probability of indirect exports, a type of economies of scope effect.     

Decomposing local fiscal multipliers: Evidence from Japan

Recent studies on fiscal policy use cross-sectional data and estimate local fiscal multipliers along with spillovers. This paper estimates local fiscal multipliers with spillovers using Japanese prefectural data comparable with the national accounts. We estimate the local fiscal multiplier on output to be 1.7 at the regional level. We decompose the regional fiscal multiplier into the prefectural fiscal multiplier and the region-wide effect. Converting the latter component into the spillover, we find that the spillover is positive and small in size. We also decompose the regional fiscal multiplier on output into multipliers on the expenditure components. Our estimates suggest that there are crowding-in effects of government spending on consumption and investment. Moreover, we find that the regional fiscal multiplier on absorption exceeds 2.0 and that the spillover to absorption is considerable in contrast to the spillover to output.     

Macroeconomic implications of population aging: Evidence from Japan

Population aging is an important feature of Japan’s economy, which since 2006 has become a super-aged society. Changes in the age distribution of the population have important macroeconomic implications. Using annual data for 1960–2015, this study tests whether population age shares have long run influences on domestic saving, domestic investment, real GDP, inflation, the fiscal balance, and the current account balance. Cointegration is found between each macroeconomic variable and the demographic variables, which is a key finding of the analysis. The main empirical findings from the long-run cointegrating equations are that the effects of demographic change on the macroeconomic variables are statistically significant and quite strong. Alternative variants of the United Nation’s population projections provide further evidence of the importance of the demographic changes for Japan’s macroeconomic future. This study finds that future trends of key macroeconomic variables are not monotonic, but rather that long swings in the demographic factors produce a mixture of moderate growth periods and episodes of GDP stagnation.     

Outsourcing and productivity: Evidence from Korean data

This paper aims to provide the first investigation of the productivity effect of outsourcing by using the Korean industry data at the three-digit ISIC level. We find that there are positive productivity gains from material outsourcing. The impact of material outsourcing increases when we account for the share of imports from China. This is due to the growth of Chinese exports to Korea over the recent years. Moreover, the results also suggest that during our sample period Korea's experiment with service outsourcing did not lead to an increase in its productivity.     

Bank capital shocks and portfolio risk: Evidence from Japan

Despite the downward trend of land prices and the ex post low return on real estate loans, Japanese banks increased their lending to the real estate sector during the 1990s. We argue that this phenomenon can be explained by the risk-shifting incentives of banks and discover that banks with low capital-to-asset ratios and low franchise value chose high-risk assets such as real estate loans. Unlike previous studies, we show that the capital–risk relationship is non-linear and changes from positive to negative as franchise value falls. We also find that a capital adequacy requirement did not prevent risk-taking behavior of under-capitalized banks since they then just issued more subordinated debts to meet this requirement. In contrast, government capital injections led banks to reduce risky loans at the margin. Recapitalization by issuing subordinated debts helped banks recover their capital losses and mitigated the credit crunch, but consequently allowed them to increase their exposure to the real estate sector and worsened the bad loan problems.     

Causes and consequences of civil strife: micro-level evidence from Uganda

To bridge the gap between case studies and highly aggregatecross-country analyses of civil unrest, we use data from Ugandato explore determinants of civil strife (as contrasted to theftand physical violence) at the community level, as well as thepotentially differential impact of these variables on investmentand non-agricultural enterprise formation at the household level.We find that distance from infrastructure (a proxy for scarcityof economic opportunities and government investment), assetinequality (social tension), presence of cash crops (expropriablewealth), and lower levels of human capital (ability to takeadvantage of opportunities in the ‘regular’ economy)all increase the propensity for civil strife. Furthermore, civilstrife, in marked contrast to violence and theft, reduces investmentand non-agricultural enterprise startups.