Economic Analysis Series No.185
THE ECONOMIC ANALYSIS

October, 2011
The Impact of Imports from Low-Wage Countries
The Role of Regional Characteristics on Plant Employment Growth and the Survival of
Plants from The Competition in Japanese Manufacturing
Tomohiko INUI
Kazuma EDAMURA
Toshiyuki MATSUURA
Does the Comprehensive curriculum prevent high school dropout in Japan?
Hiroko ARAKI
The Effect of Relative Income on Fertility
Tsukasa MATSUURA
Wages and Productivity in Firms using Foreign Trainees
Yuki HASHIMOTO
Input-Output Analysis of Informatization and the Service Economy
Yasuhiro TSUKAHARA
Japan's Bubble, Deflation, and Long-term Stagnation
-Review of An Oral History Study-
Tomohiro ISHIKAWA

The full text is written in Japanese.

(Abstract)

The Impact of Imports from Low-Wage Countries

The Role of Regional Characteristics on Plant Employment Growth and the Survival of Plants from The Competition in Japanese Manufacturing

By Tomohiko INUI, Kazuma EDAMURA and Toshiyuki MATSUURA

Abstract

From the late 1980s, Japanese manufacturers have begun the relocation of their production sites from Japan to low-wage East Asian countries such as China and Thailand. Partly due to this plant relocation, imports of manufacturing goods from these low-wage countries in East Asia increased substantially in the late 1980s and 1990s. Such relocation and the rapid rise in imports have led to concerns among policymakers that labor demand in the regions with labor-intensive industries may substantially decline. This paper is the first empirical study that attempts to examine how employment growth and the survival of the plants are affected by location in regions highly exposed to the increased import penetration from low-wage countries. We take into account the difference in the degree of various industrial agglomerations (input linkage agglomeration, output linkage agglomeration, and inter-industry agglomeration) over regions. For this purpose, we use micro data from the "Census of Manufacturer" and construct a rich, plant-level dataset covering the 1980s and 1990s on all Japanese manufacturing sectors.

We find that an increase in import penetration from low-wage countries has a negative impact on employment growth and the survival of plants from the competition in total. However, high productivity and large plants are less affected by imports. In addition, plants in the region with high input linkage agglomeration and/or high intra-industry agglomeration suffer less from such a negative impact. This could reflect the fact that these plants succeed in differentiating their products against the competing imported goods.

JEL Classification: R12; R34; F14; L25; L60
Key Words: Import competition from low-wage countries, Manufacturing plants, Economic
Geography, Panel Data

Does the Comprehensive curriculum prevent high school dropout in Japan?

By Hiroko ARAKI

Abstract

In 1994, a new academic track combining both vocational and academic courses was introduced to Japanese high schools. The system, termed Sogo-Gakka, has since been expanded to schools nationwide as the centerpiece of current secondary school educational reforms. Before its introduction, Japanese high school applicants had to select either an academic or a vocational track, which would set the course for their future career and life. In contrast to traditional academic and vocational tracks, the sogo-gakka curriculum covers a wide variety of academic and vocational subjects and is designed to provide an education that meets the individual needs of contemporary students and it is expected to improve students' achievement. The adoption of sogo-gakka has created a situation in Japanese high school education where both traditional academic/vocation tracking and comprehensive school tracks coexist. For this reason, contemporary Japanese high schools offer an excellent opportunity to study the impact of a tracking versus a comprehensive education on student achievement. In this study, I estimate the comprehensive curriculum's preventative effect on dropout using school-track level (academic, vocational or sogo-gakka) panel data covering all high schools in northern Japan, controlling for initial academic ability of students entering the schools and unobservable school-track effects. The results suggest that the adoption of sogo-gakka comprehensive tracks is particularly effective in preventing dropout among public high school students.

JEL Classification Number; H75, I28, I29
Keywords: tracking, comprehensive schools, high school dropout

The Effect of Relative Income on Fertility

By Tsukasa MATSUURA

Abstract

The purpose of this study is to analyze the effect of income and cost of children on fertility, using the conceptual framework of "relative income." In other words, the main novelty is that two hypotheses are tested. Firstly, relative income, defined by the difference between personal household income and the mean value of reference group's household income, affects fertility. Secondly, the rise of relative income lowers fertility through raising the cost of children.

We obtain the following results. Firstly, the cost and number of children differ by the reference group and the cost of children is higher in case of higher education levels. Secondly, in relatively poorer group, the relative household income positively correlates with fertility, but the absolute personal income negatively correlates with fertility. Thirdly, the rise of relative income tends to increase the cost of children, and as a result, it lowers fertility.

These results imply that while cash benefit does not lead to the rise in fertility because it does not change relative income, but lowering the cost of children increases fertility.

JEL Classification Number: J13, J18, D31
Key Word: Fertility, Relative Income, Cost of Children

Wages and Productivity in Firms using Foreign Trainees

By Yuki HASHIMOTO

Abstract

In order to examine the characteristics of firms that use the Industrial Training and Technical Internship Program and employ low-wage intern trainees from developing countries, this paper focuses on these firms by comparing the average wage and labor productivity in the same prefecture and industry. Recent empirical works at the industry level has emphasized the negative effects of the program on the average wages of native workers. However, the model does not clarify the direction of change in the native regular workers' wage in the internal labor market when firms hire foreigners to work in the external labor market. The empirical analysis in this paper is based on JITCO publications, which helped identify the firms that use the program, the job-offer database by Hellowork, and a census of manufactures. Analysis results indicate that firms in the manufacturing industry tend to use the program to offer Japanese workers lower wages than the average wages in the same area and industry, and have lower labor productivity than the corresponding average in the same area and industry. In other words, this program is used by firms that lack competitive wages and have low levels of labor productivity. On the other hand, more than 30% of firms with foreign workers offer above average wages and achieve high labor productivity. These firms possibly share the workload efficiently between the foreign trainees and Japanese employees, leading to higher productivity.

JEL Classification: J15, J18, J31
Key Words: Industrial Training and Technical Internship Program; Labor productivity; Offer wage

Input-Output Analysis of Informatization and the Service Economy

By Yasuhiro TSUKAHARA

Abstract

The Japanese economy has been characterized as an "informatization" and "service economy". To keep up with the times of informatization, new industrial sectors concerning information were introduced into the 2005 input-output table. As a result, it is possible to analyze the effect of informatization through inter-industry transactions. This study concentrates on the informatization and service economy and aims to make the relationship between these phenomena clear from the inter-industrial point of view. To do this, we use Miyazawa's interaction model of goods and service industries.

The data used in this study are obtained from a research project "Input-output analysis of Medical services, Nursing services and Social Welfare" which received Health and Labour Sciences Grants and was managed by the Institute for Health Economics and Policy. Though the main objects of this research project are the medical service, nursing service and social welfare sectors, analysis of information-related sectors is also possible.

This study uses the 2005 input-output table for Japan consisting of 30 goods sectors and 30 service sectors. We consider 4 sectors as information-related sectors. The 4 sectors are "Information and communication electronics equipment", "Communication", "Broadcasting" and "Other information and communication" sectors. From the results of our analysis, "Communication", "Broadcasting" and "Other information and communication" sectors are closely related to service sectors respectively and these 3 sectors become both the origin and the end of the service economy. Specifically, "Broadcasting" sector has a strong effect as the origin and "Other information and communications" sector has a strong effect as the end.

JEL Classification Number: C67, L80, L86
Key Words: Informatization, Service Economy, Input-Output Analysis

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