Evaluation of the fiscal effect on municipal mergers in Japan

Crawford School of Public Policy | Australia-Japan Research Centre

Event details


Date & time

Tuesday 03 May 2016


Seminar Room 8, Level 2, JG Crawford Building 132, Lennox Crossing, ANU


Professor Haruaki Hirota, Musashi University and Visiting Fellow, Australia-Japan Research Centre, Crawford School.


Hannah Harmelin

The purpose of this paper is to evaluate a fiscal common pool problem in Japanese municipal mergers. Specifically, we investigated whether the merged municipalities rapidly their increase expenditures and debt just before mergers. Because the likelihood of Japanese municipal mergers depends on a municipality’s characteristics such as population size, area, and fiscal conditions, municipal mergers are a non-voluntary and non-random phenomenon in Japan. Therefore, we identify causal effects by applying propensity score matching within a differences-in-differences framework to address the problems of endogeneity bias and sample selection bias. In particular, we focus on the subordinate merger partner in absorption-type merger. Our results show that the subordinate merger partner suffers from adverse fiscal conditions and creates the fiscal common pool problem in public projects just before mergers.

The Australia-Japan Research Centre and the ANU Japan Institute are co-hosting this Brown Bag seminar.

A light lunch will be provided during the presentation.

Please RSVP to or by Friday 29 April for catering purposes.

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