The Effects of Central Grants on Decentralized Social Programs: Post ]2005 School Expense Assistance in Japan

Masayoshi Hayashi and Yohei Kobayashi

Global COE Hi-Stat Discussion Paper Series from Institute of Economic Research, Hitotsubashi University

Abstract: This study examines the effects of central matching grants for the School Expense Assistance (SEA) in the midst of increasing child poverty in Japan. The 2005 reform replaced SEA grants with increases in general revenues through the system of Local Allocation Tax (LAT). By exploiting the facts that the replaced grants were closed ]ended and that LAT disbursements were not made to every locality, we could not only identify the effects of the matching grants but also decompose the effects into price and income effects. We show that the 2005 change indeed suppressed SEA expenditures. The loss of matching grants reduced per ]recipient SEA benefits by about JPN\5,000 (US$56) for first ]year elementary school students and JPN\12,000 (US$133) for first ]year junior high school students. The loss also reduced recipient percentage among students by 1.2-2.1 percentage points from 11.52 percent in 2004, although the eligibility criteria were barely affected.

Keywords: school expense assistance; fiscal transfers; differnce-in-difference; Japan (search for similar items in EconPapers)
JEL-codes: H73 H75 H77 (search for similar items in EconPapers)
Date: 2010-03
New Economics Papers: this item is included in nep-lab, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hst:ghsdps:gd09-118

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