Economic Analysis Series No.189
THE ECONOMIC ANALYSIS

February, 2015
The Impact of Job Displacement on Earnings Losses
Kazuma SATO
Territorial Restrictions and Consumer Welfare in a Mixed Oligopoly: The Japanese Gas Supply Market
Eiji SATOH
Effect of Investing Abroad on Home Employment and its Secular Change: An Empirical Analysis Using the Questionnaire Survey of Small and Medium-Sized Manufacturers in Osaka
Tetsuo MO
Ryoh OGAWA
Estimation of Real Assets Holdings by Japanese Households Based on the Microdata from the Family Income and Expenditure Survey:Estimation Methods and Illustrative Tables and Figures
Junya HAMAAKI
Masahiro HORI
Koichiro IWAMOTO
Saeko MAEDA
Keiko MURATA
Takeshi NIIZEKI

The full text is written in Japanese.

(Abstract)

The Impact of Job Displacement on Earnings Losses

By Kazuma SATO

Abstract

The purpose of this paper is to examine the impact of job displacement on earnings losses by using the Keio Household Panel Survey (KHPS). During the long-term recession known as the “Lost Decade,” many Japanese workers experienced involuntarily unemployment. Although many studies have attempted to estimate the extent and persistence of earnings losses due to job displacement, there are only a few such studies focusing on Japan. When compared with other industrialized countries, the Japanese job change market is small and lifetime employment is still prevalent. Therefore, the earnings losses of displaced workers are generally considered to be large. However, the actual magnitude of these losses has not been clarified. We will examine the impact of job displacement on earnings losses by sex and age using the propensity score matching method. Three key points emerge from this analysis. First, after examining the results of an analysis by sex at all age groups, we find that earnings losses are larger among men than women. However, the earnings losses ratio is larger among women than men for most age groups. Second, an analysis of men of all age groups finds that the earnings of displaced workers are lower than those of continuous workers from the year of displacement to 3 years afterward. These earnings losses total over ¥600,000 at 3 years after the time of displacement. The cost of this displacement is greater for those in the middle and older age groups. This is caused by the decrease in the employment rate after displacement and the loss of human capital. Third, the analysis of women of all age groups also shows that the earnings of displaced workers are lower than those of continuous workers from the year of displacement to 3 years afterward. Here, earnings losses amount to over ¥300,000 at 3 years after the time of displacement. For workers under the age of 40 years, earnings losses persist for at least 1 year after the time of displacement. For workers over the age of 41 years, earnings losses persist for 3 years after the time of displacement.

JEL Classification Number:J31,J63,J64
Key Word:Job Displacement、Earnings Losses、Propensity Score Matching Method

Territorial Restrictions and Consumer Welfare in a Mixed Oligopoly: The Japanese Gas Supply Market

By Eiji SATOH

Abstract

This study empirically examines the welfare effects of territorial restrictions on town gas services in Japan by modeling the choice of gas service made by a set of households. The Japanese gas market includes two major types of gas services: the liquefied petroleum (LP) gas service and the town gas service. Although LP gas prices and LP gas service areas are not regulated, town gas prices and town gas service areas are heavily regulated by the government. Particularly, territorial restrictions on town gas services essentially prohibit providers of town gas from expanding their service area. Logically, the government should readjust town gas service areas frequently in response to demand. However, town gas service areas have not been readjusted. Territorial restrictions on town gas service areas could cause a loss in consumer welfare.

Using data on the Japanese gas market for the period from 1998 to 2005, and deploying a two-stage procedure, this study analyzes whether territorial restrictions on Japanese town gas services cause a loss in consumer welfare. First, a demand model, assumed to have a nested logit structure, is estimated. The estimation reveals that the characteristics of gas services play a significant role in demand substitution between town gas and LP gas. Second, using the estimated demand parameters, a simulation exercise is conducted; the outcome indicates that an expansion of town gas services to areas without town gas pipelines has allowed some households to switch from LP gas to town gas. In the static Cournot competition among LP gas suppliers, this switch results in an intensification of competition among these suppliers, leading to a decrease in LP gas prices (5.8%) and a consequent improvement in consumer welfare (13.8%). These results suggest that the government should facilitate an expansion of town gas services to areas without town gas pipelines.

JEL Classification: L43, L95
Keywords: consumer welfare, simulation analysis, territorial restrictions

Effect of Investing Abroad on Home Employment and its Secular Change: An Empirical Analysis Using the Questionnaire Survey of Small and Medium-Sized Manufacturers in Osaka

By Tetsuo MO and Ryoh OGAWA

Abstract

This paper examines effect of foreign direct investment (FDI) on the employment of domestically-owned firms and whether and how the effect changes over the years.

We estimate two ordered probit/logit models using data collected through the questionnaire survey of small and medium-sized manufacturers whose their head offices are located in Osaka Prefecture. The results suggest that home employment increases with the increasing employment abroad but this tendency has been decreasing since the first-ever FDI for the manufacturer. This secular change persists even when we add the age of manufacturer to the set of independent variables.

Next, we simulate how the average probability of selecting the “increasing home employment” increases when employment abroad expands. The “average” in this simulation means that evaluation are at sample mean of regressors. The results are as follows: while the increase in the probability is 25 % points in the case of 10 years since first-ever FDI, the increase in the probability is 4-5 % points in the case of 20 years. Moreover, we presume that the complementary relationship between home and overseas employment disappears in the case of more than 20 years.

JEL Classification Number: F14 F16 F21
Key Words: Foreign direct investment; Home employment; small and medium-sized manufacturers

Estimation of Real Assets Holdings by Japanese Households Based on the Microdata from the Family Income and Expenditure Survey:
Estimation Methods and Illustrative Tables and Figures

By Junya HAMAAKI, Masahiro HORI, Koichiro IWAMOTO, Saeko MAEDA, Keiko MURATA, and Takeshi NIIZEKI

Abstract

Japan is facing sweeping demographic changes, population aging, and lower fertility, all of which are posing an unprecedented challenge to the Japanese economy. Among others, growing economic inequality and its impact on consumer behavior are becoming topics of increasing importance for economists and policymakers alike.

Against this background, a team studying microdata analysis on household economics, Economic and Social Research Institute (ESRI), has been developing a micro-level dataset on asset holdings by Japanese households. While there is an official estimate on household asset holdings based on the National Survey of Family Income and Expenditure (NSFIE), the NSFIE-based estimate is not suited for the detailed analysis of household economic responses to the changing assets distribution, since it is available only every five years. By basing on the Family Income and Expenditure Survey (FIES), we could construct a dataset covering all years from 1983 to 2012 continuously. This paper first outlines our methodology to estimate real (residential) assets holdings by individual households, then presents a variety of tables and figures to illustrate some interesting facts that are revealed by our FIES-based data set.

JEL Classification Number: D31, E21
Key Words: Family Income and Expenditure Survey, Micro data, Asset distribution, Bubble economy, Japan

  • 1-6-1 Nagata-cho, Chiyoda-ku, Tokyo 100-8914, Japan.
    Tel: +81-3-5253-2111