Toshihiro Okubo, 25 June 2020

The Japanese government’s policy response to the COVID-19 pandemic was to ask people to refrain from leaving their homes and to encourage teleworking. This column examines the effect of COVID-19 on the uptake of teleworking in a country that has the lowest use among developed countries. Overall, teleworking increased about 4 percentage points from January to March 2020, driven by industries and occupations related to information and located in the Tokyo metropolitan area. Teleworking is not suited to face-to-face services and manual labour, which saw substantial declines in worker incomes.

Eiji Yamamura, Yoshiro Tsutsui, 22 June 2020

Japan has had relatively few victims of COVID-19, even though the Japanese government has adopted more modest measures than other nations. Nonetheless, the pandemic has been a substantial strain on citizens' mental health, which may have triggered rises in domestic violence. This column presents evidence from various Japanese prefectures, focusing on people’s mental wellbeing before and after the state of emergency was declared. Results indicate that the announcement led citizens to take preventive steps, but caused them to experience certain heightened emotions. Crucially, the importance of mental healthcare should not be overlooked as an additional policy consideration.  

Kaoru Hosono, Miho Takizawa, Kenta Yamanouchi, 21 June 2020

How do firms grow as they age after establishment? What drives high growth rates for young firms? Using a large dataset from Japan for the period from 1995 to 2015, this column argues that the accumulation of intangible capital plays a significant role in the growth of physical productivity, which, in turn, accounts for a major part of sales growth as firms age. Of the three types of intangible capital – organisational capital, software, and R&D stocks – organisational capital explains a large part of the sales growth.

Youngmin Baek, Kazunobu Hayakawa, Kenmei Tsubota, Shujiro Urata, Kenta Yamanouchi, 03 June 2020

Anti-globalisation sentiment has been spreading around the world in recent years. Since trade liberalisation is one of the representative characteristics of globalisation, investigating who benefits from it, and to what extent, can be an important starting point in analysing the causes of anti-globalisation sentiment and promoting liberalisation. This column explains how the rent from trade liberalisation, in the form of tariff reductions, is distributed among foreign producers, wholesalers, and consumers by investigating the tariff pass-through for each player.

Pierre Cahuc, Jérémy Hervelin, 28 April 2020

It is widely believed that apprenticeships lead to better employment outcomes. This column presents the results of a field experiment conducted in France to show that apprentices do not perform significantly better than vocational students when they look for jobs outside the firm in which they trained. This means that the positive effects of apprenticeship on youth employment come from the retention of apprentices in their training firms. If the effectiveness of apprenticeship is the creation of better matches between labor market entrants and jobs, policies should focus more on the collaboration between schools and public employment services.

Keiko Ito, Kenta Ikeuchi, Chiara Criscuolo, Jonathan Timmis, Antonin Bergeaud, 23 April 2020

Interconnectedness and relative position in global production networks is an important factor for modern economies. In recent years, Japanese firms have lost their relative influence within the regional value chain. This column analyses the relationship between measures of network centrality and firm innovation output. It finds that having access to a greater breadth of customers is positively related to innovative activities, measured by patent applications. The results suggest an important role of knowledge spillovers from foreign markets.

Hiroyasu Inoue, Yasuyuki Todo, 16 April 2020

Cities and regions around the world are in lockdown in an attempt to contain the spread of Covid-19. This column examines how the economic effect of the lockdown of a city can propagate to other regions in the country, focusing on the case of Tokyo. The findings suggest that if Tokyo were to be locked down for two weeks, the loss in value added production in the city would be 4.3 trillion yen, while the production loss in the rest of Japan due to propagation through supply chains would be 5 trillion yen. In addition, the effect on other regions becomes progressively larger as the duration of the lockdown grows.

Masayuki Morikawa, 10 April 2020

Japan, similar to many countries hit by the COVID-19 shock, has experienced a sudden increase in people working from home. This column exploits the teleworking arrangements implemented at the author’s workplace to investigate the impact on productivity. In a survey, workers indicate that they are, on average, less productive at home than in the office. While some of the reasons for this, such as lack of familiarity with remote access software, will fade over time, other factors suggest that a productivity gap will remain.

Tsutomu Watanabe, 04 April 2020

It has only been a month since the coronavirus shock emerged in Japan and its full nature is still unclear. This column compares the responses of consumption and prices to the COVID-19 shock and another large-scale natural disaster that hit Japan, the Tohoku earthquake in March 2011. The responses of supermarket sales and prices at a daily frequency during the two crises are quite similar. However, evidence suggests that whereas people expected higher inflation for goods and services in the wake of the earthquake, they expect lower inflation in response to the coronavirus shock, suggesting that the economic deterioration due to COVID-19 should be viewed as driven mainly by an adverse aggregate demand shock to face-to-face service industries such as hotels and leisure, transportation, and retail, rather than as driven by an aggregate supply shock.  

Francesca Spinelli, Dorothée Rouzet, Hongyong Zhang, 03 April 2020

Multinational firms face complex decisions regarding where and how to set up their activity. Their location choices also take into account complementarities between activities and between markets. This column uses micro-data on Japanese foreign affiliates to shed light on what drives these complex location strategies for Japanese multinationals, and argues that policies to foster FDI attractiveness, especially to be chosen as the location of export platforms, need to take into account these complementarities. 

Masayuki Morikawa, 27 February 2020

Japanese listed companies are recruiting many more outside directors to their boards in response to changes in corporate law and governance codes. The column uses data on firm performance to show that these changes have had no impact yet on the risk-taking behaviour or performance of firms. One-size-fits-all regulation may not be in the best interests of all firms.

Masayuki Morikawa, 10 February 2020

Although long-term macroeconomic forecasts substantially affect the sustainability of government debt and the social security system, they cannot avoid significant uncertainty. This column assesses whether academic researchers in economics make accurate long-term growth forecasts, comparing ten-year growth forecasts made by Japanese economists in 2006–2007 with the realised figures. Even excluding the years affected by the Global Crisis, the results show that forecasts tend to be biased upwards and involve significant uncertainty, even for economics researchers specialising in macroeconomics or economic growth.

Keisuke Kondo, 14 January 2020

Increasing productivity is a top priority challenge for the Japanese economy under the current population decline, and the idea of raising the minimum wage in order to spur productivity growth has piqued interest among policymakers. This column suggests two ways in which firms may respond to a minimum wage hike: some may carry out reforms to increase productivity in response to the hike, while other less-productive firms may exit the market. The overall effect on productivity will vary across countries and firms, since the relative strength of these two effects depends on a country’s firms’ characteristics and market structure.

Yuzuka Kashiwagi, 06 December 2019

With more frequent and severe natural disasters, demand is growing for governments to support affected firms in their recovery. This column investigates the impact of subsidies after the Great East Japan Earthquake. It finds that capital subsidies were effective for the retail sector, but not in the manufacturing or other service sectors. The results suggest that the heterogeneity comes from variations in the degree of private support across sectors rather than variations in supply chain disruption.

Tetsuji Okazaki, 13 November 2019

During World War II aircraft production in Japan increased sharply. This column, part of the Vox debate on the economics of WWII, examines the reasons for this ‘production miracle’, focusing on an aircraft manufacturing plant of Mitsubishi Heavy Industries Co., one of the two largest aircraft producers in Japan. The key to the production increase was the expansion of the supplier network. Mitsubishi Heavy Industries organized many suppliers to provide aircraft parts to its plants. However, in the final stage of the war, destruction of the supplier network by strategic bombing and an earthquake caused the collapse of the company’s aircraft production.

Tsutomu Miyagawa, Takayuki Ishikawa, 13 November 2019

Following the Global Crisis, some countries increased expenditures on research and development (R&D) to address secular stagnation. This column investigates how successful this rise in R&D scale was in supporting productivity growth in Japan and other advanced economies. It argues that R&D efficiency has declined in many of these countries in the past decade, compared to the preceding ten years. This suggests that increasing R&D spending is not enough to foster growth, and that countries need to do more to support innovation and collaboration in carefully chosen sectors.

Chang Sun, Zhigang Tao, Hongjie Yuan, Hongyong Zhang, 03 November 2019

The trade war between the US and China has had impacts on other countries – including Japan, one of the most important trading partners of both countries. The column uses quarterly sales data and stock market returns to show that the operations in China of Japanese MNCs have been negatively affected by the trade war, especially when Chinese affiliates rely heavily on trade with North America. This has led to a reduction in their stock prices. 

Willem Thorbecke, 02 October 2019

Japanese exports in electronic parts and components dramatically fell in value after the Global Crisis and have not recovered until today. This column investigates why Japan lost this comparative advantage. It argues that capital inflows seeking safe havens during the crisis led to a sharp appreciation of the yen and caused yen export prices to tumble relative to production costs. Plummeting profits then hindered Japanese firms from investing enough in capital and innovation to compete with rivals.

Hiroko Okudaira, Miho Takizawa, Kenta Yamanouchi, 24 September 2019

Studies often find an aggregated near-zero employment effect when increasing the minimum wage. But the effects might vary if local employers in different regions have different market power. The column examines increases in the minimum wage in Japan and finds a more pronounced negative employment effect in local labour markets where employers had less control over wages.

Hideo Owan, 19 September 2019

Many Japanese companies complain about a shortage of qualified workers. This column argues that the difficulty is partly driven by flawed recruitment practices and suggests improvements to the hiring process. For example, customised aptitude tests and team-based structured interviews could help remedy the situation. 

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