Learning and Spillovers in Place-Based Policy Making

This study focuses on “Location Rationalization Plans,†which is one of the place-based policies initiated by the Ministry of Land, Infrastructure, Transport and Tourism of Japan. In accordance with the “Amended Act on Special Measures concerning Urban Reconstruction,†which took effect in August 2014, each local government is diligently engaged in formulating “Location Normalization Plans†to propel compact community development in preparation for a future society grappling with a declining population. As of March 31, 2024, 568 local governments had successfully formulated and published their plans. However, the formulation of plans remains in progress in some local governments. Reasons for the inability of some municipalities to formulate their plans early, while others are still in the process of doing so, have not yet been fully clarified. This study aims to elucidate which local governments have successfully completed their urban planning in a timely manner. Creating an original municipal dataset, this study finds that learning and spillovers are factors that contribute to the policy-making process. Specifically, learning exerts a substantial influence on the decision-making process regarding initiation and the swift development of analogous ongoing policies.