Industrial Relocation Policy and Heterogeneous Plants Sorted by Productivity: Evidence from Japan

Toshihiro Okubo and Eiichi Tomiura

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: In an economic geography model with firm heterogeneity, Baldwin and Okubo (2006) show that regional policies for promoting periphery development attract low-productivity firms and adversely affect the productivity gap within a country. This paper empirically examines their theoretical prediction by using plant-level data during active relocation policies in Japan. Our estimation results from plant-level regressions and propensity-score matching that are generally consistent with the theory. Compared to other regions, those targeted by policies, especially by industrial relocation subsidy programs, tend to have low-productivity plants.

Pages: 36 pages
Date: 2010-04
New Economics Papers: this item is included in nep-eff, nep-geo, nep-int and nep-ure
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Citations: View citations in EconPapers (3)

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Working Paper: Industrial relocation policy and heterogeneous plants sorted by productivity: Evidence from Japan (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:10016

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