The Effect of the Support Policy for Promotional Activities of Local Shopping Streets - Evidence from temporary suspension of the “GoTo Shotengai” policy -

Are place-based policies effective for declining small-scale shopping districts like “shotengai” (Local Shopping Streets; hereafter LSS) in Japan and downtowns in the USA? The nationwide temporary suspension of the "GoTo Shotengai" policy, which the Japanese government implemented to encourage LSS promotional activities, provided an opportunity to evaluate the support policyfor promotional activities of small-scale shopping districts. The suspension of the "GoTo Shotengai" policy due to the re-expansion of COVID-19 exogenously divided the qualified applicants of the policy into three groups: those who (1) fully implemented promotional activities in the policy-supported projects, (2) only partially implemented them, and (3) were unable to implement them due to the suspension. Using retrospective and categorical data from the survey of LSSs, we run a probit estimation for the index of the change rate in the sales of LSSs to estimate the sign of the effect of policy-supported projects. We interpret that the sign of the coefficients in the probit model is equivalent to that in the difference-in-differences model of logarithm sales. The probit estimation revealed the LSSs that fully conducted promotional activities suppressed the decline in sales compared to those that could not conduct any projects due to the suspension of the policy-supported project.