The Revitalization of Shrinking Cities: Lessons from the Japanese Service Sector

This study evaluates urban policy on revitalization in city centers focusing on the Japanese service sector. Many Japanese cities have experienced a decline in population and economic activity in city centers. The 2006 Amended Act on Vitalization in City Centers shows a renewed effort toward city center revitalization. Local governments that applied for the related subsidies have implemented policies in targeted areas (generally, the area surrounding the main train station) to attract residents and employment from the suburbs and to revitalize economic activity. Using matching difference-in-differences estimations, this study finds that revitalization policies have improved the economic performance of service establishments only in city centers of regional core cities, but finds no evidence of similar effects in regional non-core cities.