Atsushi Ohyama, 14 December 2017

The length of time industries prosper varies significantly. This column examines why some industries grow and prosper for a long period of time through the lens of submarket creation and destruction. Using data from the Japanese Census of Manufacture, it shows that the creation and the destruction of products allow an industry to continue attracting new entrants, that start-up and spinoff firms are more likely to enter a newly created submarket than incumbent firms, and that new entry is encouraged when unrealised business opportunities are reallocated smoothly.

Shujiro Urata, Atsuyuki Kato, 01 December 2017

Many governments have engaged in free trade agreements to facilitate the growth of regional production networks and global value chains, but critics argue that such agreements damage domestic industries. This column uses Japanese evidence to show that free trade agreements can increase the significance of the domestic industry in a country’s supply chain networks through intra-firm trade, and restrain the hollowing-out of the domestic industry.

Ayako Kondo, 21 November 2017

Economists have studied extensively the direct impacts of natural disasters on local labour markets, but less is known about the knock-on consequences for wider markets. This column argues that although supply chain disruptions caused by the Great East Japan Earthquake increased job separation and geographical shifts, the effects on employment status were weak. The long-run impact of the earthquake on the labour markets outside of the directly affected areas appears to be limited, despite public concerns at the time.

Ryoko Ueda, Keiichiro Kobayashi, 18 November 2017

Strategic shareholding – companies holding minority shares in other companies for the sake of business relations – can be used for anticompetition purposes or to reduce pressure from shareholders. This column explores strategic shareholding in Japan. Roughly one third of shareholders are found to be strategic, with three quarters of these being business corporations. However, in Japanese corporate culture it is not uncommon for such shareholding to occur as part of technical or business partnerships without affecting managerial independence.

Kaoru Hosono, Daisuke Miyakawa, Miho Takizawa, 12 November 2017

Several studies have examined the profitability and productivity of foreign subsidiaries, but less is known about the determinants of success. This column looks at the contribution of resources from 3,800 Japanese parent firms to the business activities of their 20,000 overseas subsidiaries. The results suggest a positive contribution of parent firms’ intangibles to subsidiaries’ production, in particular for smaller subsidiaries.

Masayuki Morikawa, 21 October 2017

Studies predicting a substantial impact of the 2020 Tokyo Olympic games on the Japanese economy have tended to overlook substitution effects in spending as well as the characteristics of those who are expected to increase their spending. This column uses a survey of 10,000 consumers across Japan to examine the net impact on consumer spending. While the majority expect no significant change in their consumption expenditures, a greater share of respondents expect a net increase than a net decrease. In general, people in their 20s and 30s, high-income earners, those with higher educational attainment, and households with at least one pre-school child expect a net increase in consumption expenditures.

Sayuri Shirai, 06 October 2017

Interest rates in many advanced economies have been declining since the 1990s. This column takes a close look at the case of Japan. In 2013 the Bank of Japan pursued a policy of quantitative and qualitative monetary easing that aimed to lower the real interest rate substantially below its natural rate. The evidence suggests that this policy has had mixed success at best, and that the natural rate of interest may decline in the foreseeable future.

Antonin Bergeaud, Gilbert Cette, Rémy Lecat, 04 September 2017

Over the 20th century, GDP growth was mainly driven by total factor productivity growth. Since the mid-2000s, however, productivity growth has been in decline. This column explores the history and future of growth focusing on four developed economies: the US, the Eurozone, the UK, and Japan. Simulated scenarios for the 21st century show a wide range of potential growth outcomes, dependent on whether total factor productivity growth stays indefinitely low, and whether the digital economy delivers a new productivity growth wave.

Tomoya Mori, 25 August 2017

The population sizes of cities are highly indicative of their industrial structure. This column identifies the cities in Japan in which manufacturing industries have significant agglomeration, and reveals that the number of these agglomeration cities differs widely across industries, with industries that are located in a smaller number of cities being found in larger cities. There is also considerable churning of population and industrial activities among Japanese cities, with population growth reflecting the development of highway and high-speed railway networks.

Sayuri Shirai, 31 July 2017

Portfolio rebalancing through large-scale asset purchases is one of the major transmission channels under the zero lower bound. This column assesses whether the channel has been effective in Japan, focusing in turn on financial institutions, firms, and households. Japanese firms and households are notoriously risk averse, limiting the effectiveness of the portfolio rebalancing channel. These results suggest that more drastic structural reforms and growth strategies are needed.

Keisuke Kondo, 23 July 2017

The large literature on agglomeration economies attests to the higher average productivity of firms in larger cities. However, this literature focuses on positive externalities, and a second potential mechanism – selection against less productive firms – has received little empirical attention. This column explores how these two mechanisms contribute to higher productivity in Japanese cities. Consistent with earlier work considering the case of France, no evidence for a selection effect is found.

Hiromi Hara, 19 July 2017

Although the gender wage gap in Japan has been decreasing over the last 15 years, it remains large. This column shows that both the ‘glass ceiling’ and the ‘sticky floor’ exist in the Japanese labour market. The country’s human resource management system and a culture which rewards those who are willing to work outside of regular hours are to blame.

Kazunobu Hayakawa, Toshiyuki Matsuura, 09 July 2017

Foreign direct investment has generally been found to have positive effects for firms in their home country. There are, however, concerns about potential negative effects for other domestic firms in the investing firm’s supply chain. This column uses Japanese firm-level data to explore the supply chain effects of foreign direct investment. Foreign direct investment does not appear to have adverse effects on domestic transaction networks. Rather, the positive effects of firms’ foreign investing are found to spread to the whole economy through their supply chains.

Masayuki Morikawa, 06 July 2017

Given the early stages of diffusion of many AI and robotic technologies, it is too early to measure the impact of these innovations on jobs. This column uses comprehensive survey data from Japan to measure the extent to which workers across different industries, levels of education, and occupations perceive their jobs to be at risk. Workers with adaptable skills acquired through higher education (particularly in science and engineering) or occupation-specific skills (particularly those in human-intensive personal services) are less worried about their jobs being replaced by AI and robotics.

Masayuki Morikawa, 03 July 2017

Occupational licensing is a common solution to the information asymmetry that exists in many professions and services. Using original survey data from Japan, this column examines how occupational licensing affects labour participation and wages. A majority of respondents are found to possess occupational licenses, and licensing is positively associated with labour force participation, particularly amongst women and the elderly.

Christopher Meissner, John Tang, 16 June 2017

Economists have long been interested in the dynamics of comparative advantage, but have only recently begun to use detailed product-level data in their analysis. This column examines the Japanese experience after the liberalisation of the 1850s. It suggests that trade costs, destination market demand conditions, and product specific factors played key roles in Japanese exports growth. Roughly 30% of growth in exports between 1880 and 1910 came from shipping new goods to new countries, selling new goods to extant trade partners, and introducing existing products to new countries.

Hidemichi Fujii, Shunsuke Managi, 16 June 2017

Patent applications are a good indicator of the nature of technological progress. This column compares trends in applications for artificial intelligence patents in Japan and the US. One finding is that the Japanese market appears to be less attractive for artificial intelligence technology application, perhaps due to its stricter regulations on the collection and use of data.

Athanasios Orphanides, 06 June 2017

Results of actions taken by central banks across advanced economies in response to the Global Crisis have been uneven in allaying fears regarding debt sustainability. This column compares the cases of Italy and Japan to that of Germany to examine whether monetary policy actions since the crisis have become a more important driver of debt dynamics than fiscal policy actions. In contrast to Japan, where in the past few years decisive monetary policy actions have allayed fiscal concerns, in Italy monetary policy decisions appear to have contributed to debt sustainability concerns.  

Yuki Higuchi, Miyuki Sasaki, Makiko Nakamuro, 20 May 2017

The quality of English language teaching in Japan is disappointing when compared with other East Asian countries or with the quality of other school subjects. This column assesses the impact of an English learning programme via Skype for Japanese high school students. Although a positive impact on English communication skills could not be established, mostly likely due to the low utilisation of the programme, it did have a positive impact on student attitudes. Policymakers may wish to consider how to combine regular English lectures and online English learning programmes to improve results.

Hiroyasu Inoue, Yasuyuki Todo, 25 April 2017

Natural disasters have enormous economic consequences, with the 2011 Great East Japan Earthquake providing a particularly stark recent example. This column uses supply chain data for more than one million Japanese firms to explore how negative shocks from natural disasters propagate through firm networks. Shocks are found to propagate very quickly, due in large part to certain ‘hub’ firms that have a high number of supply chain partners. Production substitution is the key to slowing the propagation.

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