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Welfare Use in Japan: Trends and Determinants

Author

Listed:
  • Wataru Suzuki

    (Tokyo Gakugei University)

  • Yanfei Zhou

    () (Japan Institute for Labour Policy and Training)

Abstract

This article represents the first step in filling a large gap in knowledge concerning why Public Assistance (PA) use recently rose so fast in Japan. Specifically, we try to address this problem not only by performing a Blanchard and Quah decomposition on long-term monthly time series data (1960:04-2006:10), but also by estimating prefecturelevel longitudinal data. Two interesting findings emerge from the time series analysis. The first is that permanent shock imposes a continuously positive impact on the PA rate and is the main driving factor behind the recent increase in welfare use. The second finding is that the impact of temporary shock will last for a long time. The rate of the use of welfare is quite rigid because even if the PA rate rises due to temporary shocks, it takes about 8 or 9 years for it to regain its normal level. On the other hand, estimations of prefecture-level longitudinal data indicate that the Financial Capability Index (FCI) of the local government2 and minimum wage both impose negative effects on the PA rate. We also find that the rapid aging of Japan's population presents a permanent shock in practice, which makes it the most prominent contribution to surging welfare use.

Suggested Citation

  • Wataru Suzuki & Yanfei Zhou, 2007. "Welfare Use in Japan: Trends and Determinants," Journal of Income Distribution, Journal of Income Distribution, vol. 16(3-4), pages 88-109, September.
  • Handle: RePEc:jid:journl:y:2007:v:16:i:3-4:p:88-109
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    File URL: http://jid.journals.yorku.ca/index.php/jid/article/view/7232
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    Citations

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    Cited by:

    1. Hayashi, Masayoshi, 2014. "Forecasting welfare caseloads: The case of the Japanese public assistance program," Socio-Economic Planning Sciences, Elsevier, vol. 48(2), pages 105-114.
    2. YUGAMI Kazufumi & MORIMOTO Atsushi & TANAKA Yoshiyuki, 2017. "Welfare Benefits and Labor Supply: Evidence from a natural experiment in Japan," Discussion papers 17109, Research Institute of Economy, Trade and Industry (RIETI).
    3. Masayoshi Hayashi, 2017. "Do Central Grants Affect Welfare Caseloads? Evidence from Public Assistance in Japan," CIRJE F-Series CIRJE-F-1064, CIRJE, Faculty of Economics, University of Tokyo.

    More about this item

    Keywords

    welfare use; aging; Blanchard-Quah decomposition; historical decomposition;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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