Project Leader

WATANABE Tsutomu, Faculty Fellow

Sub-Leader

UESUGI Iichiro, Consulting Fellow

Overview

While the Japanese economy has been emerging from a long period of economic stagnation and entering a phase of steady economic recovery, there has been considerable change in (1) funds procurement by firms, (2) networks between firms (interfirm relationships based on commercial and capital transactions), and (3) relationships between companies and financial institutions relating to financial and capital transactions. This study group will empirically elucidate this transformation by using micro-level data on large corporations, SMEs, and financial institutions, and also data on the transactional relationships between firms themselves and those between firms and financial institutions.

Project Leader

KAWAGUCHI Daiji, Faculty Fellow

Overview

While the Japanese economy has shown signs of recovery, labor market indicators have improved little: the average wage has not increased and the size of non-regular employment has significantly increased. Under this rather stagnated labor market environment, the issue of the wage gap has attracted public and academic interest, but little progress has been made in gaining an overall picture of the wage gap with the use of large-scale government statistics; consequently, very little is known about matters such as the causes of wage differentials between regular and non-regular workers, and how the workers' wage mobility has changed over time. Our research aims to fill the gap between social interests and rigorous empirical analysis by using microdata from large-scale government statistics. The final goal is to derive labor market policy suggestions based on rigorous empirical analysis.

Major Research Results

RIETI Discussion Papers

• "Male-Female Wage and Productivity Differentials: A Structural Approach Using Japanese Firm-level Panel Data" (ASANO Hirokatsu and KAWAGUCHI Daiji)

Project Leader

TSURU Kotaro, Senior Fellow

Overview

Amid the global boom in corporate mergers, acquisitions, and consolidation since the 1990s, the number of such cases in Japan has been increasing rapidly since the latter half of the 1990s. In order to understand these developments it is essential to investigate fully (1) the motivations and intentions, and (2) whether the initially expected effects have occurred, and company performance has improved since reorganization. First, we will build a comprehensive M&A database that integrates microdata from basic studies of company activity with M&A information, and then conduct quantitative analyses in order to verify the above, while examining characteristics by industry and type. Also, as part of the creation of new research fields, we will establish a study group on the reform of the labor market system, for which the task will be to conduct interdisciplinary analyses, from both a theoretical and an empirical perspective, of ways in which to implement labor market reform in the future.

Major Research Results

RIETI Discussion Papers

• "Consolidation of Cooperative Banks (Shinkin) in Japan: Motives and Consequences" (HOSONO Kaoru, SAKAI Koji and TSURU Kotaro)

Project Leader

YAMAUCHI Naoto, Faculty Fellow

Sub-Leader

MORIYAMA Hiromichi, Consulting Fellow

Overview

Given the advent of an aging society with a declining population, plus major structural changes in the form of globalization and the intensification of international competition, in order to maintain economic vitality and to keep the size of the public sector within a scope that is sustainable it is essential to implement reform toward establishing "small government." In our research, our activities will include the categorization of the forms of public-private partnership (PPP) such as private finance initiative (PFI), the designated administrator system, and market testing; the conduct of quantitative verification of the effects of reductions in fiscal expenditure; and the conduct of analyses of introduction incentives, including by means of surveys of local government bodies and non-profit organizations (NPOs). In this way we will put forward suggestions on how to shape policies for achieving efficient public services in Japan through PPP.

Project Leader

TAKIZAWA Hirokazu, Fellow

Overview

In today's state-of-art, science-based industries, of which the semiconductor industry is a leading example, complex cooperative relationships at the research and development (R&D) stage have been observed between companies that compete in their product markets, owing to factors such as increases in the size of investment necessary and the enlargement of the scope, growing complexity, and acceleration of R&D. Of particular note is that there has been growing interest in collaboration mechanisms that have until now been treated as black boxes in conventional economic theory, the reason being that R&D processes have come to be conducted across firm boundaries rather than kept within a single company, and there is increasing recognition of the necessity of understanding what types of communication, coordination, and collaboration mechanism are effective as well as incentive-compatible. Our research aims to address these issues from the viewpoints of the economics of information, game theory, and behavioral economics.

Major Research Results

RIETI Discussion Papers

• "Information Sharing in Joint Research and Development" (CHUMA Hiroyuki, FUJIMURA Shuzo, KAWAGOE Toshiji, MATSUBAE Taisuke, OKUNO (FUJIWARA) Masahiro, TAKIZAWA Hirokazu, WATANABE Yasunori and YOKOYAMA Izumi)

Project Leader

MIYAJIMA Hideaki, Faculty Fellow

Overview

There has been considerable progress in recent years in the analysis of the governance structure of Japanese companies, but, to date, aspects such as the discipline imposed by main banks, the role of the ownership structure, and reforms affecting directors have progressed independently, and their mutual relationships have not been grasped fully. Furthermore, as a result of the gradual progress of creative destruction (the reorganization of traditional companies and the increase in the number of newly listed companies) since the second half of the 1990s, new corporate governance problems have been emerging at Japanese companies. Accordingly, our research will address all important issues regarding corporate governance and more broadly with regard to corporate systems, both in terms of their significance for policy and from an academic perspective, opening up a new frontier in corporate governance analysis. Adding to the economic analysis of M&A that has been conducted since the previous fiscal year, specific issues we will research include governance issues affecting emerging companies and listed subsidiaries, internal governance, business portfolios, a comprehensive understanding of internal organizational structures, and clarification of the relationship between a competitive environment and corporate governance. Also, in order to elucidate these points, we will attempt questionnaire-based analyses of the business portfolios and organizational structures of first-section listed companies.

Major Research Results

RIETI Discussion Papers

• "Economic Analysis of M&As: Why has the number of M&As increased?" (ARIKAWA Yasuhiro and MIYAJIMA Hideaki)
• "Understanding the Rapid Increase of M&As: Historical background and the economic role of M&As" (MIYAJIMA Hideaki)

Project Leader

AKAI Nobuo, Faculty Fellow

Overview

To meet the increasing diversity of needs arising as society matures, it is necessary for local governments to take responsibility for implementing reforms to create systems that will ensure efficient administrative and financial management. Until now, the improvement of public infrastructure has been conducted by means of redistribution policies implemented by the central government in the name of "well-balanced land development." It is important that regional economies that have been engaging primarily in domestic interchange should in the future, in line with the trends toward globalization and free trade with other East Asian countries, deepen international exchanges, for which a prerequisite is to make efficient use of public infrastructure and administrative assets. This calls into question what form of administrative and financial systems will support efficient management and use under the auspices of the local authorities. In addressing this, the most important components of the infrastructure assets are roads, ports, and airports. However, in these business fields many policies are still concentrated on the central government; administrative and financial systems sufficiently flexible to invigorate local economies under independent local government management do not yet appear to have been developed. In our research we will focus in particular on the future form of governance of regional airports and national airports that are operated under a national pool system through the Airport Improvement Special Account, studying it from various angles through the analysis of the redistribution originating in the special account system, the problems that arise from airport development and regulations under the central government, and the operating efficiency of regional airports and efforts by local government bodies toward the future. We will also study, both theoretically and empirically, the desirable form of administrative and financial systems that will operate local airports efficiently and invigorate their local economies.

Project Leader

IWAMOTO Yasushi, Faculty Fellow

Sub-Leader

HASHIMOTO Kyoji, Faculty Fellow

Overview

Japan is currently facing the problems of an aging society, globalization of the economy, the global environment, and inequality, and it is exposed to change in its socioeconomic structure. Since a fundamental reform is also necessary in the tax system to address these changes, this research focuses on the desirable tax system that will respond to the changes in the socioeconomic structure from a medium to long-term perspective, incorporating recent developments of tax theory. For this purpose we will build a dynamic stochastic general equilibrium model that makes possible the simulation of tax reform proposals in line with policy issues in Japan, and we will analyze the effects of fundamental tax reform on economic activity and people's welfare, also discussing the direction of the reform.

Project Leader

TSURU Kotaro, Senior Fellow

Overview

In order to study a new "form" for Japan's labor market institutions, and types of reform, we will organize a study group that will conduct theoretical and empirical research from various perspectives such as law, economics, and management. While looking broadly at labor market institutions as a whole, we will also look into the interrelationships of each constituent part, and in particular will make suggestions regarding a comprehensive system of labor laws from a standpoint that transcends vertical segmentation and boundaries. When conducting our analysis we will fully embrace international viewpoints and methods of analysis, including experiences from Europe and elsewhere, and will attempt to elucidate the relationships between labor laws and institutions and the labor market and employment systems, and in turn the relationship (including the issue of non-regular employment) with economic performance.