Social Security Earnings Test and the Labour Supply of the Elderly: New Evidence from Unique Survey Responses in Japan

This study proposes an alternative approach of utilizing direct responses to a survey on the social security earnings test for the elderly to provide new evidence on the sensitivity of the labour supply decision of workers aged between 60 and 64 with respect to the test. Our empirical results show a discouraging effect on working in a large proportion of these workers in Japan, even after correcting for the observed attributes of individuals who reported being either affected or unaffected.     

The Savanna Principle

Why do microeconomic theories (such as decision theory and game theory) often fail to predict human behavior despite their mathematical elegance and deductive rigor? I suggest that such empirical failures stem from the theory's misconception of how the human brain functions. Drawing on evolutionary psychology, I propose the Savanna Principle, which posits that a hypothesis about human behavior fails to the extent that its scope conditions and assumptions are inconsistent with the ancestral environment, and its experimental corollary, that the Savanna Principle holds (and the hypothesis fails) to the extent that the conditions of the experiment resemble the ancestral environment. I suggest that the Savanna Principle and its corollary might together explain the relative empirical failure of noncooperative game theory and public choice theory, and the relative success of network exchange theory and competitive price theory tested in double auction markets in experimental economics. Copyright © 2003 John Wiley & Sons, Ltd.     

Lessons learnt from the mounting non-performing loans in Japan after the 1990s

When the property bubble burst in the 1990s, the corporate and banking sectors in Japan suffered from historically huge losses that resulted in a sluggish economy that lasted nearly 15 years. In 2002, the economy finally bottomed out. By going through this process, Japan learnt many lessons in the fields of economics, sociology, and politics. Two critical lessons that the financial authorities gleaned from this experience are: (1) Disclosure of the current conditions of financial institutions in the early stages is of the utmost importance. Once losses start to mount, disclosure and one-time compensation should trigger a systemic risk. (2) At times when a country is going through a strong economic period, it is important to make preparations for economic stagnation. To ensure that this is successful, the first step is for the public sector to share the understanding of the current economic conditions and the forecasts for its seeable future. It is also important that they disclose this knowledge to other authorities and people to ensure transparency. Those lessons are not so special, rather ordinary. But it is difficult to practice them. The mechanism of the bubble economy and how it burst is not clear yet in economics. But history shows such situations repeat themselves in different ways. In the process of globalisation, excess liquidity in the financial market is invested into too illiquid assets all over the world, especially in the emerging countries and real property market. To know what is happening is critical. But the domestic authorities who supervise financial institutions in the mother market face two difficulties to do it. Owing to the development of IT, the boundary between financial institutions and funds becomes vague and investment money will go freely over cross-border.     

Stock Market Responses Under Quantitative Easing: State Dependence and Transparency in Monetary Policy

This paper evaluates the effects of unconventional monetary policies adopted by the Bank of Japan from the year 2001 to 2006. A new measure is proposed to identify a nontraditional monetary policy shock from policy packages under the zero lower bound of short‐term nominal interest rates during the quantitative easing period, using data on intraday 3‐month Euroyen futures rates. We find that stock markets do not react to a policy surprise in an expected manner and negatively respond to a monetary easing surprise. Moreover, we find an asymmetric response during a boom and a recession and a nonlinear reaction because of increasing uncertainty concerning future inflation dynamics and the enhancement of monetary policy transparency. Our result suggests that it is difficult to implement unconventional monetary policy to manage agents’ expectations and a ‘lean against the wind’ policy to prevent asset bubbles, particularly at the zero bound.     

Do households smooth expenditure over anticipated income changes? Evidence from bonus payments to public employees in Japan

This paper provides new evidence of consumers’ reaction to an anticipated sizable change in income. Until FY2002, Japanese public employees received predictable large bonus payments three times a fiscal year (in June, December, and March), but the March bonus was abolished in FY2003. We compare the seasonal patterns of public employees’ expenditure before and after the reform of the bonus payment schedule. Contrary to the prediction of the life cycle/permanent income hypothesis (LC/PIH), we find evidence that monthly patterns of household expenditure were significantly affected by the anticipated large change in income pattern. However, at closer inspection, this excess sensitivity of expenditure is observed only for expenditure subcategories of some durability, i.e., durables and semi-durables. Thus, while the LC/PIH does not appear to hold for expenditure (which we observe here), it may still hold for consumption.     

A new anatomy of the retirement process in Japan

In Japan, retirement is a gradual process that transpires over a particularly long period of time. Using large scale micro-level datasets from the Survey of Employment of the Elderly compiled by the Japanese government, we provide some stylized facts on the development of retirement behavior since the 1980s and explore factors affecting the individual retirement decision. First, we observed a general declining trend in the proportion of retired individuals aged 55–59 (especially females) while the proportion of retired individuals aged 65–69 (especially males) increased. Second, the survival analysis on actual retirement age shows that those who are more educated are more likely to retire earlier and those who experienced mandatory retirement are less likely. Third, the survival analysis on the expected retirement age shows that individuals who are satisfied with their job in terms of nonmonetary rewards are less likely to retire earlier.     

Time-use data, analysis and modeling: toward the next generation of transportation planning methodologies

This paper argues that transportation planning methodologies must be built on the central thesis of the activity-based approach to travel demand modeling, namely, that travel is a derived demand that reflects people's desire and need to participate in activities. The paper discusses why this foundation for transportation planning methodologies is necessary to address contemporary planning and policy analysis issues. The paper also argues that the introduction of time-use data, analysis and modeling is a key element in the development of the next generation of transportation planning methodologies. Following a brief review of time-use studies, the paper discusses a number of planning and policy analysis areas in which time-use data will be of particular value, including the evaluation of induced or suppressed travel demand. The concepts advanced in the paper are illustrated with two brief numerical examples. These examples show how model systems based on time-use data can be used to (i) estimate the number of induced trips that would result from a reduction in commute travel time, and (ii) evaluate the impacts of alternative transportation improvement projects.     

Do TV-aided model lessons in class improve student performance? Evidence from public primary schools in Papua New Guinea

Lack of access to high-quality education remains a serious concern in many developing countries. This is especially the case for rural areas, including islands suffering from a shortage of skilled teachers and sufficient educational equipment. We examine the impact of introducing TV-aided model lessons in class to enhance the quality of teaching (the EQUITV project) on the national examination test scores of Mathematics and “Combined Subject” (a comprehensive subject comprising 30% science and 70% social studies and other topics) as well as English in the final year of primary education in Papua New Guinea. We employ a panel event study to capture the different timings of the intervention across schools over multiple time periods. We find that the project significantly and robustly improved test scores for girls only in English 3 years after the introduction of the project, but no improvement was seen for boys.     

Economic Impacts of SARS/MERS/COVID-19 in Asian Countries

This paper surveys the recent literature on the economic impacts of SARS, MERS, and COVID-19, which Asian countries have experienced in the past two decades. In particular, we provide a detailed summary of how each of the past infectious diseases has impacted on the Asian economies and the extent of that impact. This paper also documents how the governments of Asian countries have responded to the COVID-19 shocks with their economic policies, and discusses the effectiveness of these economic policies to mitigate the COVID-19 shocks on their economies.     

On the inclusiveness of rural road improvement: Evidence from Morocco

This paper explores the heterogeneous impact of a rural road improvement project on the economic activities and living standards of households in Morocco. Road pavement improvements are expected to promote better market access, encourage the transformation of traditional agricultural activities, and create opportunities for new economic activities. However, benefits may not extend evenly across different groups, and the distributional consequences call for careful empirical investigation. We employ a difference-in-differences (DID) estimation using a household-level panel dataset collected under a quasi-experimental setting in the 2010s. We classify households into three groups based on asset holdings (rich, middle, and poor). We provide several new findings. First, there was no significant transformation of agricultural production or sales for all groups. Second, rich households increased hired agricultural labor and began paid employment while middle households started new family businesses. Poor households, however, did not enjoy these new employment opportunities except for a marginal increase in family businesses. Third, due to shifts in employment, the rural road renewal project improved household consumption 3%–4% annually for rich and middle households, an impact not clearly seen among poor households. Thus, our findings show that the economic benefits of rural road improvement might not be well-inclusive.