Sources of successful cost recovery for water: Evidence from a national survey of South African municipalities

This article analyses variation in municipal cost recovery for water services in South Africa. It uses original data from a national survey of municipalities, conducted in late 2000. A multivariate causal model is estimated to measure the effects of social and institutional context, service infrastructure, and billing and payment practices. The analysis shows that cost-recovery outcomes vary widely and are quite sensitive to factors that can be influenced by municipal decision-makers. Substantive implications for a typical South African municipality are clarified through simulations of the effects of upgrading infrastructure, introducing various cost-recovery measures, and extending basic services to poor households. As profound changes in the institutional and policy environment--including municipal restructuring (demarcation) and the 'free basic water' policy--force municipalities to review their cost-recovery strategies, the article offers insights into how to achieve the best possible outcomes.     

The effect of mergers on employment and wages: Evidence from Japan

This study investigates the impact of mergers on employment and employees’ wages in Japan, based on 111 mergers between listed firms observed between 1990 and 2003. Typically, the number of employees decreases by 4.45% three years after a merger, even after changes in sales and other variables are controlled. Firms that experience related mergers, and rescue mergers are more likely to decrease the number of workers. At the same time, wages increase by 5.46% per employee. These results suggest that the main motivation behind mergers is not to divest employees of their wealth.     

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.     

Banking crisis and productivity of borrowing firms: Evidence from Japan

We investigate the effects of bank distress on the productivity of borrowing firms by using data on listed companies in the Japanese manufacturing industry during the 1990s. We find that deterioration in the financial health of banks, which is measured by a decline in the capital-asset ratio, decreased the productivity of their borrowers during the period of the severe financial crisis (FY1997–1998). Our finding empirically confirms the theoretical view that an increase in financial friction negatively affects the productivity of the corporate sector.     

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.     

An analysis of the impact of demand and cost factors on employment

Summary Recently attempts have been made by several European researchers to improve the realism of demand for labour functions by introducing the economic lifetime of machinery as a determinant. One of the more well-known studies is that by Den Hartog and Tjan. The article criticizes their clay-clay vintage model, both on theoretical and empirical grounds. Despite some attractive features, an alternative more Keynesian-oriented analysis is not considered to be wholly satisfactory, either. Finally, a synthesis is developed which should be considered as a starting point for new theoretical and empirical work, and which advocates more attention to the replacement of capital goods, rather than to their scrappage, as is done in most vintage models. Faculty of Economics, University of Amsterdam. I am indebted to J. H. von Eije and H. J. Mastenbroek for their research assistance, and to F. A. G. den Butter, H. den Hartog, J. Weitenberg and S. K. Kuipers for valuable comments on an earlier draft of this article. None of these persons is of course responsible for any remaining errors or omissions. This draft circulated under the same title as Research Memorandum No. 7604 of the Department of Economics of the University of Amsterdam. The memorandum was written winter 1975 and circulated after June 1976. Since that date a considerable amount of papers have been published on the subject and the ideas of the author have also changed somewhat. Nevertheless the original content of Research Memorandum No. 7604 has been largely retained.     

Financial innovations and the interest elasticity of money demand: Evidence from an error correction model

The difficulty of estimating a stable money demand function has been blamed on financial innovations of the past two decades. Gurley and Shaw's [1960] thesis implies that a proliferation of money-like assets resulting from financial innovations increased the interest elasticity of money demand. However, Hafer and Hein [1984] provided empirical evidence to the contrary. This paper presents the empirical results of the M2 demand for money using an error correction model for the period 1959:1–87:4 and two subperiods 1959:1–73:4 and 1974:1–87:4. The findings suggest lower interest and price elasticities for money demand in the second sample in which money substitutes proliferated.     

Transmission of liquidity shock to bank credit: Evidence from the deposit insurance reform in Japan

Finding the causal effects of liquidity shocks on credit supply is complicated by the endogenous relation between loan demand and liquidity position of banks. This paper attempts to overcome this problem by exploiting, as a natural experiment, the exogenous deposit outflow prompted by the removal of a blanket deposit guarantee on time deposits in Japan. We find that during the period of transition from a blanket guarantee to a partial guarantee, weak banks suffered from a large outflow of partially insured time deposits. More importantly, we find that those weak banks were not able to raise a sufficient amount of other types of deposits to make up for the loss of time deposits, which, consequently, forced them to cut back on loan supply. These results are consistent with the theory that the imperfect substitutability of insured deposits and uninsured deposits affects the tightness of banks’ financing constraints and ultimately the supply of bank loans.     

The transmission mechanism of monetary policy in Japan: Evidence from banks' balance sheets

We examine how banks' responses to monetary policy vary according to their balance sheet using Japanese bank data from 1975 to 1999. We find that the effect of monetary policy on lending is stronger for banks that are smaller, less liquid, and more abundant with capital. The effects of bank balance sheet on monetary transmission are different by bank types, policy stances and borrowers' industries. Our results imply that a lending channel of monetary transmission exists, that the effect of expansionary monetary policy is attenuated if banks' capital is scarce, and that the effect of monetary policy on the allocation of funds depends on banks' balance sheets. J. Japanese Int. Economies 20 (3) (2006) 380–405.     

Recreation demand and economic value: An application of travel cost method for Xiamen Island

This paper uses the travel cost method to evaluate the recreational benefits of a beach along the eastern coast of Xiamen Island in China. Our results indicate that the total value for the beach and its associated recreation is in excess of US$53 million. This paper also discusses the protection of this significant tourism resource and considers the use of a suitable entrance fee.     

Sectoral Effects of Monetary Policy: Evidence from Malaysia

The present paper analyzes the effects of monetary policy shocks on aggregate and eight sectoral outputs for Malaysia using vector autoregressive models. In line with many existing studies on Malaysia, the results are supportive of the real effects of monetary policy shocks. More importantly, we find evidence suggesting sector-specific responses to innovations in monetary policy. In response to positive interest rate shocks, we note that the manufacturing, construction, finance, insurance, real estate and business services sectors seem to decline more than aggregate production. By contrast, we observe the relative insensitivities of agriculture, forestry and fishing, mining and quarrying, electricity, gas and water to interest rate changes. The results, therefore, seem to confirm potential disparities in the effect of monetary policy on real sectoral activities.     

The residential demand for electricity in Japan: An examination using empirical panel analysis techniques

This paper examines the residential demand for electricity in Japan, excluding Okinawa-prefecture, from 1975 to 2005 as a function of the disposable income per household and the overall unit price of electricity for general consumers, by using the empirical panel analysis techniques of a panel unit root test, a panel cointegration test, and group-mean dynamic ordinary least squares (DOLS) estimators to determine whether or not each variable is stationary. This study's contribution is twofold. First, for a more accurate empirical economic analysis, it divides Japan into a number of regions so that the estimation of coefficients becomes more powerful due to the increased degree of freedom from the utilization of the panel data. Second, the study chose Japan for this analysis on the basis of discussions regarding the deregulation of the residential electric power supply that is scheduled for the near future. All variables—sales per household, price, and income per household—can be assumed to have a unit root and cointegration relationship. The results determine that the price effect is negative and elastic and that the income effect is inelastic. These results correspond to other such studies on developed countries that are significant economic powers.     

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.     

Movement of natural persons and the sieve of immigration policy: Evidence from United States

Review of World Economics - This article examines the trends and determinants of temporary movement of foreign workers (viz., mode 4 or movement of natural persons under trade ambits) into the...     

Quality and efficiency of home help elderly care in Japan: Evidence from micro-level data

With the introduction of public long-term care insurance in the spring of 2000, for-profit enterprises were allowed to enter the home help elderly care market in Japan for the first time. We take advantage of data from a unique, self-conducted survey to compare the efficiency and quality of service offered by providers with different types of ownership and different lengths of operation. We present two major findings. First, contrary to the prevailing perception, we find no significant difference in the quality of service between for-profit and nonprofit providers. Although the nonprofits are able to offer more qualified and experienced staff, the quality of services provided by nonprofits is worse in some aspects than that of their for-profit counterparts. Second, our estimates of a quality-adjusted cost function demonstrate that the management of newer providers is more efficient than that of older providers. Our results show that the competition mechanism works effectively in the home help care market, and that there is no reason to believe that the for-profit providers are behaving opportunistically. Thus, this study justifies the belief that free-market policy contributes significantly toward improving the quality and the efficiency of home help long-term care in Japan. J. Japanese Int. Economies 21 (2) (2007) 287–301.     

Price discrimination in physician services markets based on race: New test of an old implicit hypothesis

Prior econometric studies of physician fee determination report that fees are positively related to the proportion of the market area that is black and negatively related to the proportion of the market area that is white, but the studies provide only sketchy explanations for these results. This article presents a price discrimination model which explains the empirical results and provides the specific prediction that low income self-pay consumers in the black community constitute the group that pays higher prices for physician services. The study then replicates prior econometric results on a more recent national database, but finds that the results are sensitive to specification. When geographic differences are controlled for in the empirical model, the results fade and a statistical test indicates that the expanded specification is superior to the specification which replicated the price discrimination result. The conclusion is that there is no compelling evidence of price discrimination in physician services markets based on race.