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Municipal mergers and special provisions of local council members in Japan

  • Hirota, Haruaki
  • Yunoue, Hideo
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    The number of municipalities in Japan has decreased from 3,232 in 1999 to 1,820 in 2006 because of municipal mergers, called Heisei-no-Daigappei. This paper estimates the political choices of local council members in Japan’s municipal mergers. In Japan, being a local council member is a full-time job. The local council has “veto powers” over local administration. Since the wage for a local council member is quite high, council members like to keep their seats. The jobs of local council members are affected by municipal mergers, as preferential treatment and penalties are delivered by the central government to the local government in municipal mergers. In our results, merged municipalities apply “Special Provisions” for local council members because of the size of the municipality. The choice of municipality is also affected by the national government’s political power. In addition, Special Provisions lead to additional fiscal burdens. These fiscal burdens will transfer to the whole country because “the Local Allocation Tax grants system” (abbreviated as LAT grants), a national grants system, works well in Japan. The municipalities that choose the Special Provisions exploit the benefits from other municipalities without any additional costs. Our results show that the central government induces the free-rider problem in Japan.

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    File URL: http://mpra.ub.uni-muenchen.de/37485/1/MPRA_paper_37485.pdf
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    Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 37485.

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    Date of creation: 29 Apr 2011
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    Handle: RePEc:pra:mprapa:37485
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    1. Walzer, Norman, 1972. "Economies of Scale and Municipal Police Services: The Illinois Experience," The Review of Economics and Statistics, MIT Press, vol. 54(4), pages 431-38, November.
    2. Peter Egger & Marko Koethenbuerger, 2010. "Government Spending and Legislative Organization: Quasi-experimental Evidence from Germany," American Economic Journal: Applied Economics, American Economic Association, vol. 2(4), pages 200-212, October.
    3. Akihiko Kawaura, 2010. "Self-Serving Mayors and Local Government Consolidations in Japan," Working Papers 201014, University of Hawaii at Manoa, Department of Economics.
    4. Bradbury, John Charles & Crain, W. Mark, 2001. "Legislative organization and government spending: cross-country evidence," Journal of Public Economics, Elsevier, vol. 82(3), pages 309-325, December.
    5. Geys, Benny & Heinemann, Friedrich & Kalb, Alexander, 2007. "Local Governments in the Wake of Demographic Change: Efficiency and Economies of Scale in German Municipalities," ZEW Discussion Papers 07-036, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    6. Reza Baqir, 2002. "Districting and Government Overspending," Journal of Political Economy, University of Chicago Press, vol. 110(6), pages 1318-1354, December.
    7. Jordahl, Henrik & Liang, Che-Yuan, 2006. "Merged Municipalities, Higher Debt: On Free-riding and the Common Pool Problem in Politics," Ratio Working Papers 107, The Ratio Institute.
    8. Bradbury, John Charles & Stephenson, E Frank, 2003. " Local Government Structure and Public Expenditures," Public Choice, Springer, vol. 115(1-2), pages 185-98, April.
    9. Bodkin, Ronald G & Conklin, David W, 1971. "Scale and Other Determinants of Municipal Government Expenditures in Ontario: A Quantitative Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 12(3), pages 465-81, October.
    10. Tyrefors Hinnerich, Björn, 2009. "Do merging local governments free ride on their counterparts when facing boundary reform?," Journal of Public Economics, Elsevier, vol. 93(5-6), pages 721-728, June.
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