AGI Working Paper Series “Causes of the Sharp Decline in Migration to Major Metropolitan Areas in the 1970s”

My paper has been published in the AGI Working Paper Series.

Causes of the Sharp Decline in Migration to Major Metropolitan Areas in the 1970s 

(Co-authored with Shinsuke Ikeda and Hiroki Hoshina)

[AGI Repository] https://agi.repo.nii.ac.jp/records/2000145

Abstract:
Japan's rapid growth in the 1960s was accompanied by a massive migration from rural to urban areas. However, immediately after 1970, migration declined sharply, and at the same time, the rate of economic growth plummeted.
To explain this decline in urban-bound migration, we estimated the urban-bound migration function.
The estimation reveals that in the 1970s, the largest factor contributing to the decline in this migration was the relative increase in per capita income in rural areas. The second most important factor was narrowing regional disparities in the job-to-application ratio. In addition, the relative increase in the stock of social capital in the local regions also
contributed. However, the population change in the rural areas had negligible effects on urban-bound migration in the 1970s.
This paper also demonstrates that the relative increase in per capita income in rural areas is largely due to policy-based regional redistribution, implying that the large-scale redistribution of the fruits of rapid economic growth to rural areas halted urban-bound migration and reduced the growth rate. This suggests that for developing countries experiencing high growth, curbing the political pressure to redistribute to rural areas may be important to sustain the growth.

AGI WP: “Introducing Severance Payment Systems in Japan —A Proposal for Vacancy Decontrol—”

Hatta presented an AGI working paper “Introducing Severance Payment Systems in Japan —A Proposal for Vacancy Decontrol—”.

Abstract  

In Japan, the court requires job restoration rather than a severance payment from a firm after it decides that a dismissal has been abusive. This results in a high settlement cost for termination. 

This paper makes two proposals for introducing severance payments to reduce settlement costs in Japan. The first applies to existing contracts and proposes to specify levels of severance payments that would replace the current job restoration requirement after the court determines that a case is abusive. 

The second applies to new employees either for a recently vacated position or a new position and proposes vacancy decontrol, which allows firms to set the levels of severance payments freely while also honoring the existing contracts. Within this category, this paper proposes government-assisted vacancy decontrol, a transitional measure, where the government sets a minimum level of statutory severance payment, which is equal to six months of wages for a worker who has worked for 20 years, following the Taiwan precedent. After the need for the transitional measure is dissolved, complete vacancy decontrol should be introduced, abolishing the statutory severance payment. We have proposed that even at this stage, the government should publicly set a default level of the severance payment, which a firm should observe unless an explicit agreement or contract stipulates otherwise. The government should immediately introduce some form of vacancy decontrol for senior workers who have already retired from a regular job.

“Competition policy vs. industrial policy as a growth strategy”

Hatta presented a paper “Competition policy vs. industrial policy as a growth strategy” on China Economic Journal.

Hatta, Tatsuo. (2017). Competition policy vs. industrial policy as a growth strategy. China Economic Journal, 10 (2): pp. 162-174. https://doi.org/10.1080/17538963.2017.1321216

ABSTRACT:
This paper shows that competition policy, rather than industrial policy, generated the rapid economic growth in post-war Japan. It also reveals that Japan’s growth rate was lowered from the mid-1970s due to newly introduced industrial policies and paucity of further competition policy. The current Abe government recognises the need for competition policies in Japan to recover from the low-growth period. The paper describes the types of competition policy carried out under Abenomics, especially in National Strategic Special Zones.

Abbreviations: METI: Ministry of Economy, Trade, and Industry. NSSZ: National Strategic Special Zones.

KEYWORDS: 
Competition policy, industrial policy, growth strategy, trade liberalization, privatization