Economic Analysis Series No.187
THE ECONOMIC ANALYSIS

June, 2013
Estimation of households’ preferences for reforms in employee public pension plan in Japan
Tomoki KITAMURA
Kunio NAKASHIMA
Effect of Executives’ Shareholding Ratio on Corporate Scandal Prevention
Yusuke MIYOSHI
Haruhiko TSUZUKI
Analysis of the Male Marriage Premium Utilizing Propensity Score Matching Method
Kazuma SATO
The Resolving of the Entrance-Waiting for the Facilities Service and the Influence of the Facilities-Function-Differentiation
Yoshimi ADACHI
Nobuo AKAI
Toshio UEMATSU
ESRI International Conference
“Toward Revitalization of the Japanese Economy: The Role of Policy in the Global Economy”
Economic and Social Research Institute

The full text is written in Japanese.

(Abstract)

Estimation of households’ preferences for reforms in employee public pension plan in Japan

By Tomoki KITAMURA and Kunio NAKASHIMA

Abstract

We investigated households’ preferences for reforms in employee public pension plan in Japan using a choice experiment. We considered five policy approaches: increasing contribution rate, decreasing pension benefit, increasing pension age, increasing the variation in pension benefit by allowing more equity investments, and increasing consumption tax. We found that households required an increase (1) of JPY 19,810 in the monthly pension benefit for accepting a one-year increase in pension age; (2) of JPY 4,510 for a 1% increase in contribution rate; and (3) of JPY 3,530 for a 1% increase in consumption tax. These results indicate that among the above policy approaches, an increase in pension age is the most unpopular. An increase in consumer tax is preferred over an increase in contribution rate. In addition, households are willing to lower the monthly benefit by JPY 2,270 for a 1% increase in risk of benefit. This indicates that households are willing to increase investment risk—such as by allowing more equity investments—to avoid immediate increases in contribution rate and consumption tax. As for the difference between the participants’ and beneficiaries’ preferences, we found that while participants required an increase of JPY 5,630 in the monthly benefit for accepting a 1% increase in consumption tax, beneficiaries showed no preference. This indicates that beneficiaries are tolerant of increased consumption tax.

JEL Classification Number :D14, G02, H31
Key Words: employee’s public pension plan reforms; household’s preferences; choice experiment

Effect of Executives’ Shareholding Ratio on Corporate Scandal Prevention

By Yusuke MIYOSHI and Haruhiko TSUZUKI

Abstract

This study was conducted to ascertain whether the shareholding ratio of corporate managers has a significant effect on illegal acts committed by the management, whether granting stock options to the current management can be substantially effective in preventing misconduct, and whether having the board of directors hold the company’s shares can serve a monitoring function for management wrongdoing.

Past empirical studies of the relation between corporate performance and executives’ shareholding ratios, however, has failed to address illegal acts committed by management in relation to stock price recovery and the management’s shareholding ratio. They have also been unable to explain differences in managers’ behavior according to their shareholding ratio and the adoption of stock options.

This study has therefore analyzed the relation of stock options and executives’ shareholding ratios with the incentives of executives to engage in illicit activities, i.e., the issue of a trade-off between the shareholder composition that prevents illegal acts and inducement to management misdeeds for the personal benefit of the managers. More specifically, the study conducted an empirical analysis of companies that have experienced scandals in the past to ascertain whether the managers’ shareholding ratios and availability of stock options significantly affected the misconduct of the management and whether boards of directors having a high shareholding ratio were able to control the torts of their corporate managers.

The results of these analyses suggest that large shareholders accept the misconduct of their corporate managers if it enhances corporate performance. Their incentives to prevent such management behavior are therefore low (the hypothesis of repeated illegal acts). Results also show that, although the higher the shareholding ratio of managers becomes, the more illegal acts can be controlled, it remains unclear whether granting stock options would prevent unlawful activities: it might encourage such behavior.

JEL Classification Number:K12, G32, G38
Key Words:illegal acts, executives’shareholding ratios, stock options

Analysis of the Male Marriage Premium Utilizing Propensity Score Matching Method

By Kazuma SATO

Abstract

The purpose of this paper is to reexamine the male marriage premium by exploiting propensity score matching method, utilizing Keio Household Panel Survey. We have uncovered three key points from this analysis. Firstly, the results of OLS reveal that after controlling the unobserved fixed effect, male marriage premium vanishes. Secondly, the results of cross section matching estimation reveal that although marriage premium is observed in case of the estimations of annual income, the analyses of per-hour wage rate do not find the evidence of the marriage premium. Thirdly, the results of the difference in differences (DID) matching estimation indicate that male marriage premium is not observed in the analysis of both per-hour wage rate and annual income. Although the results of cross section matching estimation that use the annual income as dependent variable confirm the existence of marriage premium, it could be considered to be caused by unobserved fixed effect. By the estimated results described above, it can be concluded that after considering the unobserved fixed effect and self-selection, male marriage premium is not observed in Japan.

JEL Classification Number:J12,J24,J31
Key Words:Marriage Premium, Self-Selection, Propensity Score Matching Estimation

The Resolving of the Entrance-Waiting for the Facilities Service and the Influence of the Facilities-Function-Differentiation

By Yoshimi ADACHI, Nobuo AKAI and Toshio UEMATSU

Abstract

The long-term care facility service cost suddenly increases since the start of the nursing-care insurance system and will be increasing with the advancing aging in future. The cared periods are prolonged as the average life span of the elderly person lengthens. The family function is weakening as the nuclear family being in progress and the single or two household increases. From these, in addition to the financial problem, it should be examined the restraint of the nursing-care cost considering the care burden for the households.

This paper examined two points. First, assuming the current system, the model of the long-term care facility service cost is built according to the age-grade, the need of nursing-care-degree and nursing-care-service per one elderly person. Secondly, using this model, it is examined how the cost of the long-term care facility service, especially the intensive-care old people's home, is restrained,

Specifically, with the waiting entrance data of the intensive-care old people's home, this paper calculates the amount of change of the cost of the long-term care facility service, in cases of meeting all the demand of the waiting entrance and of limiting the part demand. Additional calculations also consider that the reduction for the medical expenses occurs with the transfer from the medical facilities to the nursing facilities.

As a result, the followings are shown; firstly it is effective that an elderly person who needs intensive nursing care could be entered preferentially giving a constant limit to the slight need of nursing care degree for facilities service. Secondly, it is for the medical care treatment expenses to be restrained by differentiating appropriately the facilities service between the medical facilities and the nursing facilities.

JEL Classification Number:C15, H51, I11
Key Words:Nursing-care cost, Entrance-Waiting for the Facilities Service,
Facilities-Function-Differentiation

ESRI International Conference
“Toward Revitalization of the Japanese Economy: The Role of Policy in the Global Economy”

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