Disemployment caused by Foreign Direct Investment? Multinationals and Japanese employment

Kozo Kiyota 27 November 2014

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With the growing activities of multinationals, one of the major concerns for policymakers in developed countries is the disemployment caused by multinationals, especially in the manufacturing sector.[1] For example, increased competition with foreign countries forces firms to relocate their production sites overseas, which results in disemployment in the home country. In particular, the decline in manufacturing jobs is believed to have been the consequence of globalisation.

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Topics:  Labour markets Productivity and Innovation

Tags:  Japan, disemployment, FDI, manufacturing

Regional wage differentials in the public sector

Masayuki Morikawa 23 November 2014

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After the global financial crisis, some European countries reduced their public sector wages to ensure fiscal sustainability. In Japan, after the Great East Japan Earthquake, the wages of the central government officials were cut for two years to finance the reconstruction expenses. Even in normal times, the appropriate level of public sector wages is debated frequently in every country. Because wages are an important incentive for workers, appropriate wage levels and their structure in the public sector are essential for ensuring the quality and efficiency of public services.

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Topics:  Labour markets

Tags:  fiscal sustainability, global crisis, Public sector wages, public-sector pay, Public sector, private sector, Great East Japan Earthquake, Japan, Europe, agglomeration, spatial equilibrium, wages, wage premia, regional wage differentials

Adverse selection and moral hazard in the Japanese public credit guarantee schemes for SMEs

Kuniyoshi Saito, Daisuke Tsuruta 14 November 2014

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Credit rationing caused by capital market imperfections is widely seen as an important phenomenon in the loan market, especially for small and medium enterprises (SMEs). Among various ways of alleviating the problem, credit guarantee schemes are one of the most important policy tools in many countries. An economic rationale for such public intervention is that it can enhance efficiency by providing additional funds for SMEs that are in fact healthy but unable to secure enough loans because of the informational gap between lenders and borrowers.

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Topics:  Financial markets

Tags:  credit rationing, SMEs, credit, public guarantees, Japan, capital markets, asymmetric information, moral hazard, adverse selection, loan guarantees, insurance

Innovation in community economic development in a declining population era

Ryohei Nakamura 01 October 2014

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Declining rural areas

Municipality population projections for 30 years from now by the Japan Policy Council made big headlines on 9 May 2014, not only in national but also in local newspapers across the country. The Council’s alarming predictions – such as “the number of women in their 20s and 30s will decrease by half in half of the municipalities”, “the population will fall below 10,000 in 523 municipalities”, and “some municipalities will cease to exist” – drew the attention of the local media.

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Topics:  Productivity and Innovation

Tags:  Japan, declining rural population, community development, Sustainability, comparative advantage

Does initial job status affect midlife outcomes and mental health? Evidence from a survey in Japan

Takashi Oshio, Seiichi Inagaki 26 September 2014

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Does starting working life with non-regular jobs decrease the odds of success in later life? There has been debate about the long-term consequences of flexible market entry across European countries (Scherer 2004, 2005). On the one hand, the entrapment scenario argues that once an individual begins his or her working life with a non-regular job – such as one with fixed-term contracts – entrapment in such jobs is inevitable.

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Topics:  Labour markets

Tags:  non-regular workers, Japan, Dualism

Unstash the cash! Corporate governance reform in Japan

Chie Aoyagi, Giovanni Ganelli 19 August 2014

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Cash holdings by Japanese companies are very high compared to other G7 countries. As it can be seen in Figure 1, the average ratio of cash and cash equivalent holdings to market capitalisation of Japanese listed companies during 2004-2012 was above 40%, compared to values in the 15-27% range in other G7 countries. Such high cash holdings coexist with a negative contribution of private investment to growth in the last few years and with falling real wages in the face of positive labour productivity growth for most of the last two decades.

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Topics:  Industrial organisation Microeconomic regulation

Tags:  Japan, corporate governance, cash holdings

Secular stagnation: Facts, causes, and cures – a new Vox eBook

Coen Teulings, Richard Baldwin 10 September 2014

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Teaser from original column posted on 15 August 2014

Six years after the Crisis and the recovery is still anaemic despite years of zero interest rates. Is ‘secular stagnation’ to blame? This column introduces an eBook that gathers the views of leading economists including Summers, Krugman, Gordon, Blanchard, Koo, Eichengreen, Caballero, Glaeser, and a dozen others. It is too early to tell whether secular stagnation is really secular, but if it is, current policy tools will be obsolete. Policymakers should start thinking about potential solutions.

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Topics:  Global crisis Macroeconomic policy Monetary policy

Tags:  interest rates, US, Europe, Japan, investment, macroeconomics, Great Recession, zero lower bound, savings, secular stagnation, SecStag debate

Natural disasters, firm activity, and damage to banks

Kaoru Hosono, Daisuke Miyakawa 13 August 2014

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Direct and indirect impacts of natural disasters

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Topics:  Environment Global economy Industrial organisation

Tags:  Japan, bank lending, natural disaster, earthquakes, firm activity

Identifying and quantifying monetary policy transmission through bank balance sheets

Kaoru Hosono, Daisuke Miyakawa 09 August 2014

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How does monetary policy affect firm activities? While there is long-standing literature on this issue, the transmission mechanism of monetary policy is currently attracting renewed attention. The reason is that many central banks – including the US Federal Reserve, the Bank of England, the ECB, and the Bank of Japan – have introduced unconventional monetary policies such as quantitative easing and credit easing in the wake of the Global Crisis, and sooner or later will have to exit from these policies.

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Topics:  Financial markets Global crisis Monetary policy

Tags:  monetary policy, Japan, global crisis, quantitative easing, unconventional monetary policy, balance sheets, financial accelerator, credit easing, bank lending channel

Protection of intellectual property to foster innovations in the service sector

Masayuki Morikawa 20 July 2014

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Given the declining labour force due to population ageing, accelerating the productivity growth of industries – especially the service industries – is an important element of the growth strategy in Japan and most advanced countries. While there are a variety of factors affecting productivity, innovation is one of the key determinants of productivity growth. However, innovation in the service sector has not been studied well. I present findings on innovation in the service sector by focusing on the effect of intellectual property rights on innovation.

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Topics:  Productivity and Innovation

Tags:  R&D, growth, productivity, patents, Japan, innovation, services, intellectual property, trade secrets

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