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Propagation of Positive Effects of Postdisaster Policies through Supply Chains: Evidence from the Great East Japan Earthquake and Tsunami

Author

Listed:
  • Yuzuka Kashiwagi

    (Waseda University)

  • Yasuyuki Todo

    (Waseda University)

Abstract

This study evaluates the impact of “group subsidies,” a policy intervention to repair and reinstall damaged capital goods and facilities of small and medium-sized enterprises after the Great East Japan earthquake and tsunami. In addition to their direct effect on firms that received the subsidies, we estimate their indirect effect on firms that did not receive the subsidies but were linked with recipient firms through supply chains. Employing a propensity score matching and analysis of variance approach, we find a positive effect of the subsidies on small recipient firms’ postdisaster sales and employment. We also find a positive indirect effect of the group subsidies on firms in disaster-hit prefectures that did not receive any group subsidy but were linked through supply chains with a recipient firm. Our results indicate the propagation of postdisaster policy effects through supply chains, which are often ignored in the academic literature and the policymaking arena.

Suggested Citation

  • Yuzuka Kashiwagi & Yasuyuki Todo, 2020. "Propagation of Positive Effects of Postdisaster Policies through Supply Chains: Evidence from the Great East Japan Earthquake and Tsunami," ADB Economics Working Paper Series 604, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0604
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    References listed on IDEAS

    as
    1. Yuzuka Kashiwagi & Petr Matous & Yasuyuki Todo, 2018. "International propagation of economic shocks through global supply chains," Working Papers 1810, Waseda University, Faculty of Political Science and Economics.
    2. Yasuyuki Todo & Kentaro Nakajima & Petr Matous, 2015. "How Do Supply Chain Networks Affect The Resilience Of Firms To Natural Disasters? Evidence From The Great East Japan Earthquake," Journal of Regional Science, Wiley Blackwell, vol. 55(2), pages 209-229, March.
    3. Marc J. Melitz, 2003. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," Econometrica, Econometric Society, vol. 71(6), pages 1695-1725, November.
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    Keywords

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    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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