Papers - Okubo Toshihiro

The Resilience of FDI to Natural Disasters through Industrial Linkages

Toshihiro Okubo, Hayato Kato

Environmental and Resource Economics (Environmental and Resource Economics)  82 ( 1 ) 177 - 225 2022.03

Research paper (scientific journal), Joint Work, Accepted,  ISSN  09246460

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When do multinationals show resilience during natural disasters? To answer this, we develop a simple model in which foreign multinationals and local firms in the host country are interacted through input-output linkages. When natural disasters seriously hit local firms and thus increase the cost of sourcing local intermediate inputs, most multinationals may leave the host country. However, they are likely to stay if they are tightly linked with local suppliers and face low trade costs of importing foreign intermediates. We further provide a number of extensions of the basic model to incorporate, for example, multinationals with heterogeneous productivity and disaster reconstruction.

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`By a Silken Thread': regional banking integration and credit reallocation during Japan's Lost Decade

Toshihiro Okubo, Mathias Hoffmann

Journal of International Economics (Journal of International Economics)  137 2022.02

Research paper (scientific journal), Joint Work, Accepted,  ISSN  00221996

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Regional banking integration allows credit to be reallocated to regions with high credit demand. Using the natural experiment of Japan's lost decade, we show that this reallocation channel mitigated the real effects from the bank liquidity shock in prefectures with many bank-dependent small firms. We propose an instrument for modern-day regional banking integration that exploits the fact that regional segmentation of banking markets in Japan goes back to the institutions set up for silk export finance in the late 19th century. We illustrate how the difference between the OLS and IV estimates can provide information about unobserved cross-regional heterogeneity in bank-firm matches when only aggregate regional data is available. Our results highlight that well-integrated banking markets are important and complementary to bond markets in limiting macroeconomic asymmetries in a monetary union, in particular during major financial crises.

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Industrial cluster policy and transaction networks: Evidence from firm-level data in Japan

Toshihiro Okubo

Canadian Journal of Economics (Canadian Journal of Economics)  55 ( 4 ) 1990 - 2035 2022.01

Research paper (scientific journal), Joint Work, Accepted,  ISSN  00084085

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Cluster policy is designed to facilitate inter-firm networking. We examine industrial clusters in Japan based on firm-level transaction data. Cluster firms significantly expand transaction networks not only with local firms but also with firms in the agglomerated core Tokyo. We confirm the robustness of the results with historical policy experience of the regions as an instrumental variable and the cluster participation in a later period for a placebo test. By disaggregating firms in their relationships with financial institutions, we find that cluster firms expanding networks with firms in Tokyo are financed mainly by regional banks.

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Natural disasters and regional industrial production efficiency: evidence from pre-war Japan

Mohan P., Okubo T., Strobl E.

Regional Studies (Regional Studies)  57 ( 10 ) 2054 - 2072 2022

ISSN  00343404

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In this paper we investigate whether destruction due to natural disasters induces industries to increase their regional production efficiency using the case of pre-war Japan, a setting of frequent disasters and technological upgrading. To this end we compile a regional sectoral dataset of natural disaster destruction and production for machinery and textiles. We then employ a stochastic frontier analysis (SFA) approach to estimate the role of disaster events on changes in production efficiency. Our results show that earthquakes led to increases in efficiency for both machinery and textiles, although they were substantially greater for textiles due to the recovery persisting longer. Overall earthquakes contributed 6.8% of efficiency gains in textiles and 3.1% in machinery. However, allowing events to compound in their impact showed that such gains were dampened when there were damaging earthquakes in subsequent years. In contrast, for climate-related natural disaster events there is only weak, if any, evidence that these played a significant role in determining productive efficiency.

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Who got vaccinated for COVID-19? Evidence from Japan

Toshihiro Okubo

Vaccines (Vaccines)  9 ( 12 )  2021.12

Research paper (scientific journal), Joint Work, Accepted

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Vaccination has been critical to reducing infections and deaths during the coronavirus disease 2019 (COVID-19) pandemic. While previous studies have investigated attitudes toward taking a vaccine, studies on the determinants of COVID-19 vaccination behavior are scant. We examine what characteristics, including socioeconomic and non-economic factors, are associated with vaccination behavior for COVID-19 in Japan. We use a large nationwide online survey with approximately 10,000 participants. As of September 2021, 85% of the respondents said that they had received or would receive a COVID-19 vaccine. Employing logistic regression analysis on vaccination behavior, we found that vaccination rates are higher among those who are older, married, educated, and/or work in a large company. On the other hand, vaccination rates tend to be lower among the self-employed, younger women, and those with poor mental health. Income did not significantly correlate with vaccination. Medical workers were found to have a relatively high rate of vaccination. Although attitude towards risk and time preference were not crucial factors for vaccination, fear of infection, infection prevention behavior, and agreement with government policies on behavioral restrictions in crisis situations positively correlated with vaccination.

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Importing, Outsourcing and Pollution Offshoring

Toshihiro Okubo

Energy Economics (Energy Economics)  103 2021.10

Research paper (scientific journal), Joint Work, Accepted,  ISSN  01409883

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Focusing on Japan over the period 1988–2013, this paper provides the first test of the extent to which pollution offshoring has occurred for this major industrial economy. In so doing, we identify whether the composition of domestic production, imports, overall trade patterns and overseas outsourcing has become more or less pollution intensive. We then focus on the role played by overseas outsourcing in pollution offshoring. Utilising a unique dataset of approximately 4000 Japanese firms for the period 2009–13, we use propensity score matching and difference-in-differences to examine how a firm's CO2 emissions intensity is affected by its decision to outsource some of its production overseas. Our results indicate that the composition of Japanese imports appear to have become dirtier and the carbon embodied within Japanese imports is larger and has grown more rapidly than the carbon embodied within exports. We also find that relative to a control group, the growth rate of pollution intensity of firms that begin overseas outsourcing is 7.3 percentage points lower in the year that they start overseas outsourcing and 7.7 percentage points lower in the following year, suggesting that outsourcing is one route through which pollution offshoring is occurring. New importers also experience slower emissions growth but the reduction is less than for new outsourcers.

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Individual Preferences on Trade Liberalization: Evidence from a Japanese Household Survey

Toshihiro Okubo

Review of World Economics (Review of World Economics)  158 ( 1 ) 305 - 330 2021.09

Research paper (scientific journal), Joint Work, Accepted,  ISSN  16102878

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This paper studies an individual’s preference on trade liberalization using a Japanese household survey, the Keio Household Panel Survey. As a result, we show that preferences toward trade liberalization are affected by economic factors (income, gender, family, asset, and job status) as well as noneconomic factors (noncognitive factors and behaviroal biases). We find that male, educated, and people with smaller family prefer trade liberalization. Furthermore, people who prefer liberty to equality and have less local patriotism, tend to be positive to trade liberalization.

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Agglomeration of Low-productive Entrepreneurs to Large Regions: A Simple Model

Toshihiro Okubo

Spatial Economic Analysis (Spatial Economic Analysis)  16 ( 4 ) 471 - 486 2021.08

Research paper (scientific journal), Joint Work, Accepted,  ISSN  1742-1772

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This paper develops a simple model of spatial sorting where the least productive entrepreneurs are drawn to the large core region. This is an unusual feature. The literature on spatial sorting typically shows how the most productive individuals and firms agglomerate to the core. However, our model is consistent with empirical evidence that reveals that large agglomerations also attract the low skilled.

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Public Preferences on Immigration in Japan

Toshihiro Okubo

Japan and the World Economy (Japan and the World Economy)  58 2021.08

Research paper (scientific journal), Single Work, Accepted,  ISSN  09221425

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This paper examines the factors affecting Japanese attitudes toward immigration. Using individual-level survey data, we investigate the impact of both economic/socioeconomic (cognitive) and noneconomic (or noncognitive) factors, the latter including behavioral bias, communication skills, social stance and subjective well-being. The results indicate that individuals that are male, richer, more educated, younger and from smaller families tend to agree with immigration. More importantly, noneconomic factors also matter, with those that have lower time preference, better English language skills and overseas experience tending to be more positive to the perception of immigration. In addition, individuals trusting neighborhoods rather than the government, that make donations to society and that keep in good health tend to be more positive toward immigration.

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Teleworker performance in the COVID-19 era in Japan

大久保敏弘

Asian Economic Paper (Asian Economic Papers)  20 ( 2 ) 175 - 192 2021.04

Research paper (scientific journal), Joint Work, Accepted,  ISSN  1535-3516

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This paper investigates teleworker efficiency in Japan in the COVID-19 era by using unique survey data on telework. Many Japanese workers started teleworking during the pandemic and found both benefits as well as impediments. Overall, we find that telework experience and the work environment (e.g., having clearly specified tasks and a flexible working system), changes in work–life balance (e.g., working time), and good mental health improves teleworker efficiency.

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Natural disasters, firm survival, and growth: Evidence from the Ise Bay Typhoon, Japan

Okubo T., Strobl E.

Journal of Regional Science (Journal of Regional Science)  61 ( 5 ) 944 - 970 2021.03

ISSN  00224146

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This paper investigates the damage impact of the 1959 Ise Bay Typhoon on firm survival and survivor performance in Nagoya City, Japan. We combine firm-level data with a local damage proxy storm surge-induced flooding. We find that firms in retail and wholesale were less and those in manufacturing more likely to survive after being flooding. There was some evidence of spillover effects from nearby regions on firm exit. Surviving firm performance was heterogeneous across sectors in that some (manufacturing and construction) upgraded and others (retail and wholesale) their capital. Indirect impacts from nearby regions were both positive and negative, contingent on the sector of operation.

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Preferences for nuclear power in post-Fukushima Japan: Evidence from a large nationwide household survey

Toshihiro Okubo

Energies (Energies)  13 ( 11 )  2020.06

Research paper (scientific journal), Joint Work, Accepted

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© 2020 by the authors. Utilizing the data of a large nationwide household survey conducted in 2014, we investigate public preferences on nuclear power in Japan after the Fukushima nuclear accident and the role of four sets of factors: (1) household/individual socioeconomic characteristics, (2) psychological status, (3) geographical aspects, and (4) Fukushima accident-related experiences. The preferred energy mix, according to the averaged responses from the survey, includes 0.59 for renewables, 0.29 for fossil fuels, and 0.12 for nuclear-much more skewed towards the renewables than the actual national share of renewables of less than 0.2. Male, older, unmarried, less educated, high-income people, and government party supporters have a preference towards a higher share of nuclear power, except if they live near nuclear power plants. The experience of blackout and aversion to nuclear power during the Great East Japan Earthquake of 2011 lowers the share of nuclear power in the preferred mix.

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Regional Variations in Exporters’ Productivity Premium: Theory and Evidence

OKUBO TOSHIHIRO

Review of International Economics (Review of International Economics)  27 ( 3 ) 803 - 821 2019.07

Research paper (scientific journal), Joint Work, Accepted,  ISSN  09657576

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© 2019 John Wiley & Sons Ltd The international trade literature confirms that the average productivity of exporters is higher than that of nonexporters, while economic geography studies establish that urban firms tend to be more productive than rural ones. By introducing region-specific transportation costs in a Melitz-type heterogeneous-firm trade model, the theory predicts that the minimum threshold productivity level for export is higher but that for survival by serving the local market is lower in the periphery region than in the core. Using Japanese plant-level panel data, we find evidence supporting the theoretical prediction that exporters in the peripheral regions, especially those distant from the core, have large productivity premiums.

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GVC journeys: Industrialisation and deindustrialisation in the age of the second unbundling

Baldwin R., Okubo T.

Journal of the Japanese and International Economies (Journal of the Japanese and International Economies)  52   53 - 67 2019.06

Research paper (scientific journal), Accepted,  ISSN  08891583

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© 2019 Elsevier Inc. Offshoring and participation in global value chains (GVCs) are critical to understanding the rapid deindustrialisation of G7 nations and the rapid industrialisation of a handful of developing nations. This paper distinguishes between trade in final goods and trade in parts to track the shifting pattern of the location of manufacturing. We introduce a simple empirical measure of comparative advantage in parts on one hand and in final goods on the other. We illustrate how this distinction can help organise thinking on the patterns of industrialisation and deindustrialisation—namely the ‘GVC journeys’ of advanced and emerging economies. We also provide one simple model. The model highlights the interactions of trade costs and the knowledge transfers to accompany offshoring of parts production and assembly, which we call trade-led versus knowledge-led globalisation.

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Quantifying the EU-Japan Economic Partnership Agreement

OKUBO TOSHIHIRO

Journal of the Japanese and International Economies (Journal of the Japanese and International Economies)  51   110 - 128 2019.06

Research paper (scientific journal), Joint Work, Accepted,  ISSN  08891583

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© 2019 Elsevier Inc. This paper provides a quantitative analysis of the new EU-Japan Economic Partnership Agreement (EPA), the biggest bilateral deal that both the EU and Japan have concluded so far. It employs a generalized variant of the Eaton–Kortum (2002) model, featuring multiple sectors, input-output linkages, services trade, and non-tariff barriers (NTBs). It uses the results of an econometric ex post analysis of a related existing FTA, the one between the EU and Korea, to approximate the expected reductions in the costs of NTBs. This approach yields long-run welfare effects for Japan of about 18 bn USD per year (0.31% of GDP) and of about 15 bn USD (0.10%) for the EU. On average, the agreement does not appear to harm third countries. 14% of the welfare gains inside the EPA stem from tariffs, the remaining 86% from NTB reform, and the services sector account for more than half. In the EU, value added in the agri-food sector goes up most, while in Japan the manufacturing and services sectors gain.

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Creative destruction of industries: Yokohama City in the Great Kanto Earthquake, 1923

Okazaki T., Okubo T., Strobl E.

Journal of Economic History (Journal of Economic History)  79 ( 1 ) 1 - 31 2019.03

Research paper (scientific journal), Accepted,  ISSN  00220507

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© 2019 The Economic History Association. The Great Kanto Earthquake occurred on 1 September 1923 and inflicted serious damage on Yokohama City. About 90 percent of the factories in Yokohama City were burnt down or completely destroyed. However, these manufacturing industries appear to have swiftly recovered in the aftermath of the damage. This article investigates the role of creative destruction due to the Great Kanto Earthquake. Using firm-level data on capital (horsepower of motors) before and after the earthquake, we find substantial creative destruction, that is, upgrade of machine technology and/or survival of efficient firms. We find further collaborating evidence of this at the prefecture level.

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Natural Disasters and Spatial Heterogeneity in Damages: The Birth, Life and Death of Manufacturing Plants

OKUBO TOSHIHIRO

Journal of Economic Geography (Journal of Economic Geography)  19 ( 2 ) 373 - 408 2019.01

Research paper (scientific journal), Joint Work, Accepted,  ISSN  14682702

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© The Author (2017). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oup.com. In this paper, we use the 1995 Kobe earthquake as a natural experiment to examine the impact of a large exogenous physical shock on local economic activity. For the first time we are able to control for local spatial heterogeneity in the damage caused by a natural disaster using geo-coded plant location and unique building-level surveys. In a survival analysis of manufacturing plants, our results show that building-level damage significantly affects a plant's likelihood of failure and this effect persists for up to 7 years. Further analysis demonstrates that the plants most likely to exit as a result of earthquake damage are the least productive which is suggestive of a cleansing effect as the average productivity rate of the remaining plants increases. We also find that continuing plants experience a temporary increase in productivity following the earthquake consistent with a 'build back better' effect. In terms of local regeneration our results indicate that plant births increase in areas with more severe damage consistent with redevelopment plans for Kobe.

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Comments on Technical Change, Exports, and Employment Growth in China: A Structural Decomposition Analysis

Okubo Toshihiro

ASIAN ECONOMIC PAPERS 18 ( 2 ) 47 - 48 2019

ISSN  1535-3516

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Why are Firms that Export Cleaner?International trade, Abatement and Environmental Emissions

OKUBO TOSHIHIRO

Journal of Environmental Economics and Management (Journal of Environmental Economics and Management)  91   166 - 183 2018.09

Research paper (scientific journal), Joint Work, Accepted,  ISSN  00950696

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© 2018 Elsevier Inc. This paper proposes a detailed mechanism for why exporting firms may have a lower emission intensity when emissions are subject to an environmental tax. This mechanism of our model is supported by Swedish firm-level data. Our mechanism runs through firms’ endogenous investments in abatement. Firms’ abatement investments depend on their production volumes, since a larger scale allows them to spread the fixed costs of abatement investment across more units. Production volumes increase in firm productivity and, as a consequence, firms’ emission intensity is negatively related to firm productivity. Exporting also leads to higher production volumes and thereby to a lower emission intensity. Thus, trade has an effect on emissions independently of firm productivity. Trade therefore leads to higher but cleaner production. The overall effect of trade on emissions is neutral in our model. Trade liberalization does not affect aggregate emissions in our benchmark case of symmetric countries.

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Market Size in Globalization

OKUBO TOSHIHIRO

Journal of International Economics (Journal of International Economics)  111   34 - 60 2018.04

Research paper (scientific journal), Joint Work, Accepted,  ISSN  00221996

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© 2017 Elsevier B.V. A salient feature of the current globalization is a loss of manufacturing in developed countries and rapid industrialization in middle-sized developing countries. This paper aims to construct a simple three-country trade and geography model with different market sizes and non-constant wage rates. The large country fosters industrial agglomeration (geographical concentration) in the early stage of globalization, but loses manufacturing in the later stage of globalization. When losing manufacturing, the large country might be worse off. Thus, the large country might have an incentive to implement welfare-maintaining policies to prevent a loss of manufacturing. All of these results can be explained by market sizes.

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