Masaki Nakabayashi
The University of Tokyo, Institute of Social Science, Faculty Member
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Does the ownership structure affect firms' performance? We first theoretically show that in an inefficient market, investors motivate managers to pursue a higher return on equity, the short-term performance indicator instead of a... more
Does the ownership structure affect firms' performance? We first theoretically show that in an inefficient market, investors motivate managers to pursue a higher return on equity, the short-term performance indicator instead of a higher return on asset, the long-term indicator and encourage managers to distort the financial leverage. This self-fulfilling distortion implies that, in an inefficient market, a higher concentration of ownership improves long-term performance through containing the distortion. To test the prediction, we build a new dataset of Japanese firms from 1878 to 1910. Then, we show that the Japanese market then was inefficient, that the bond flotation was distorted among low and mediocre performing firms, and that a higher concentration of ownership at the president improved the return on asset. These results are consistent with the tendency in contemporary non-US advanced economies. A higher concentration of ownership offsets the adverse effects of a less efficient capital market.
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Employers use educational background as a signal of a worker fs latent ability. This signaling effect decreases as employers learn about the worker fs ability with his/her work experience, which results in negative coefficient of... more
Employers use educational background as a signal of a worker fs latent ability. This signaling effect decreases as employers learn about the worker fs ability with his/her work experience, which results in negative coefficient of interaction term between schooling and experience in wage equation. Meanwhile, if schooling and experience are complements, it works to make the coefficient positive. We show the latter complementarity effect dominates for vocational school graduates school in Russia. Given that European vocational school systems were introduced from the Russian Empire, our results at least partly explain why employer learning is only weakly observed in Europe.
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This paper aims to position the Japanese employment system in historical perspective from the industrial revolution until the present. The contribution of labor to economic growth over the last century can be decomposed into the transfer... more
This paper aims to position the Japanese employment system in historical perspective from the industrial revolution until the present. The contribution of labor to economic growth over the last century can be decomposed into the transfer of labor from the agricultural sector to the non-agricultural sector, the accumulation of general skills through the improvement and spread of public education and the accumulation of industry-specific and firm-specific skills. Additionally, the Constitution of the Empire of Japan of 1889 and the Civil Code of 1896 guaranteed freedom of movement to its citizens,which resulted in high labor mobility of workers into the 1920's, in contrast to western countries which adopted this much later, leaving them with fewer institutions geared towards motivating employers to invest in industry-specific skills of workers. In the age of high mobility, there were two methods of skill accumulation in Japan. One was the private cartels of employers as observed i...
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Background Public health depends on both medical treatment development and the public’s willingness to take such treatment. To determine whether having experienced delayed localized hypersensitivity reactions to COVID-19 vaccines, i.e.,... more
Background Public health depends on both medical treatment development and the public’s willingness to take such treatment. To determine whether having experienced delayed localized hypersensitivity reactions to COVID-19 vaccines, i.e., “COVID arm” symptoms affect confidence in the safety of vaccination, willingness to take COVID-19 vaccines, and the acknowledgement of the importance of vaccination, and also confidence in science. Methods We implemented a panel survey on internet in February 2021 and March 2022 in Japan, before and after COVID-19 vaccines were administered to the public in Japan, and we used “COVID arm” symptoms, which are independent of one’s prior confidence in vaccination, as our instrument. Out of the non-probability sample of 15,000 respondents in the first wave in February 2021, 9,668 responded to the second wave conducted in March 2022. We used “COVID arm” symptoms as a natural experiment conditional on the background characteristics of the respondents. Main ...
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The Tokugawa shogunate, which ruled early modern Japan from 1603 to 1868, provided considerably effective judicial system with the comm odity market and the short term local government bond market. Under the governance, th e impersonal... more
The Tokugawa shogunate, which ruled early modern Japan from 1603 to 1868, provided considerably effective judicial system with the comm odity market and the short term local government bond market. Under the governance, th e impersonal trades expanded rapidly in the commodity market and the specific financ ial market, and the national economy was integrated. On the other hand, the shogun ate did not provided the farm land market with third party enforcement, and tried to r egulate the labor mobilization. This led to an early modern economy where the commodity market and the public financial markets were well integrated while the land and the labor market were segregated and were governed by local communities in the personal manner with long-term
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The data include sales, total assets, paid-in stock, outstanding borrowing, outstanding bond, profit, balance brought forward, stock holding ratio of the president as of the current term, stock holding ratio of the director whose stock... more
The data include sales, total assets, paid-in stock, outstanding borrowing, outstanding bond, profit, balance brought forward, stock holding ratio of the president as of the current term, stock holding ratio of the director whose stock holding ratio was the minimum in the board as of the current term and average share prices in the current term of all firms listed on the Tokyo Stock Exchange from 1878 to 1910 as long as the financial statements are available
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The following is a short introduction to this special issue, which builds on and significantly extends and updates the research published recently in the Iwanami Series on Japanese economic history. First, we offer a modern interpretation... more
The following is a short introduction to this special issue, which builds on and significantly extends and updates the research published recently in the Iwanami Series on Japanese economic history. First, we offer a modern interpretation of four institutional elements that are particularly important for understanding the growth path of the Japanese economy. These are (a) ownership; (b) regulation of factor markets; (c) labor mobility and (d) the judiciary. These four elements properly clarify the incentive structure behind economic institutions. We then briefly explain how the four articles in this special issue—two at the macro level providing updated estimates of long-run rates of growth in gross domestic product (GDP) and total factor productivity (TFP), and two at the micro level examining institutional changes in specific markets—build on this unified framework, and deepen our understanding of Japanese economic history.
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"Transaction costs depend on the degree of informational asymmetry in trading goods. This environment provides commitment to certain quality with an opportunity to earn quality premium given the degree of asymmetry. A device of... more
"Transaction costs depend on the degree of informational asymmetry in trading goods. This environment provides commitment to certain quality with an opportunity to earn quality premium given the degree of asymmetry. A device of commitment to quality could be inspection and branding either by a trader or manufacturer. In the market of raw silk, the largest export of Japan from the late nineteenth century, informational asymmetry between Japan and the Western destinations was serious and Western trading companies dominated quality control by the mid-1880s. Then, Japanese manufacturers internalized inspection and branding processes, earned quality premium, and began rapid growth."
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New estimates on the premodern economic growth of Japan, based on more concrete evidence, have been presented. We revise the estimates of Japan’s gross domestic product (GDP) from the mid-eighth century to the mid-19th century and its... more
New estimates on the premodern economic growth of Japan, based on more concrete evidence, have been presented. We revise the estimates of Japan’s gross domestic product (GDP) from the mid-eighth century to the mid-19th century and its population in the 12th century and describe the institutional transformations that correspond to the output changes. The revision of output and population results in updated estimates of per capita GDP for the medieval period and extension of the growth estimates in the early modern period to the annual series for 1651–1841. This study employs the techniques of quantitative inference and descriptive interpretation of the estimated performance. The findings show that: (a) Both the GDP and population significantly declined towards the 12th century, stagnated and experienced recovery from the 13th century onwards, and then continued to grow through the 17th century; (b) GDP growth accelerated in the 18th and 19th centuries; and (c) per capita GDP growth b...
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Corporation (in alphabetical order). This financial support enables us to issue CARF Working
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Transition between private governance mechanisms and the state court is not necessarily unidirectional. This research assumes that non-monotonic changes in governance mech-anism comes from complementarity between the private and public... more
Transition between private governance mechanisms and the state court is not necessarily unidirectional. This research assumes that non-monotonic changes in governance mech-anism comes from complementarity between the private and public mechanisms when neither of both is sufficiently efficient. Then it studies transition of governance in the labor market of Japanese silk-reeling industry from the 1890s to the 1920s, which rapidly grew then and often showed poaching, and ascertains that employers first had recourse to the court for enforcement of employment contract, they second built private mechanisms for settlement backed by the court, and third abandoned the private mechanism. Key words: Employment contract; scope of the state court; complementarity between judicial and endogenous systems; Japan.
Moritaro Yamada’s Analysis of Japanese Capitalism (1934) characterized the Japanese economy in that time. First, it highlighted the duality of the modern sector, whose productivity was relatively high, and the traditional sector, whose... more
Moritaro Yamada’s Analysis of Japanese Capitalism (1934) characterized the Japanese economy in that time. First, it highlighted the duality of the modern sector, whose productivity was relatively high, and the traditional sector, whose productivity was relatively low. Second, it argued that the paternalistic risk-bearing mechanism worked in the traditional sector. Third, it discussed that while the stability of society and the continued stagnancy of productivity had been symbiotic conditions, this structure was disintegrating. The work provoked intense debate among Japanese Marxian economists to understand the Japanese economy. However, classical economics then did not have the analytical tools for a twosector economy, duality, risk sharing, and dynamic transition in the growth path, which led to the ambiguity of Yamada’s description and confusion in the debate. We place his argument on duality and risk sharing in an analytical framework, and rephrase its implications.
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Even after modern economic growth began in the Western world, the international market, which consists of a number of national and regional markets, has been more or less inefficient with respect to information. To calm this inefficiency,... more
Even after modern economic growth began in the Western world, the international market, which consists of a number of national and regional markets, has been more or less inefficient with respect to information. To calm this inefficiency, economic institutions have taken important roles. In addition, players in a society whose institutions are superior have earned information rent in the international market. The treaty port in Japan that was imposed by Western powers worked as such an efficient institution, and a Japanese export industry took advantage of it at the beginning of Japan fs industrialization. This designed market provided useful information with the export industry in the inland, as, say, stock markets do with various industries in modern economic societies.
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Modern contract law generally does not allow property rights or similar claims to be made against employees. This undermines a claim on the return on the employer fs investments in recruiting and training a worker, making them vulnerable... more
Modern contract law generally does not allow property rights or similar claims to be made against employees. This undermines a claim on the return on the employer fs investments in recruiting and training a worker, making them vulnerable to possible infringement from a bystander. Accordingly, employers investment in recruiting and training might become deficient. Therefore, protecting an employer fs investment, balanced against the mobility of the labor market for better employer-employee matches, has emerged as an issue in the transitory phase towards a market-based economy. We explore how the Japanese state court in its early period addressed this issue in the tight labor market of the silk-reeling industry, the leading industry then. The court first directly protected interests of employers whose employees were poached, at the expense of workers mobility. Then, it seemed to indirectly govern transactions between employers as a shadow off-the-equilibrium path. Thus, an employer wh...
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Analysis of the Japanese Capitalism by Moritaro Yamada, a representative Marxian economist in Japan in the 1930s, was an innovative work in four points. First, it described the Japanese economy as a two-sector economy that contained the... more
Analysis of the Japanese Capitalism by Moritaro Yamada, a representative Marxian economist in Japan in the 1930s, was an innovative work in four points. First, it described the Japanese economy as a two-sector economy that contained the capital stock and the consumption goods sectors, second, pointed out the duality composed of the modern sector whose productivity was relatively high and the traditional sector whose productivity was relatively low, third, argued that the authoritarian risk-bearing mechanism worked in the traditional sector, and fourth, discussed that while the stability of society and the chronic stagnancy of productivity had coexisted, the structure was then being dismantled, at the time when economics did not have analytical tools for the two-sector economy, duality, risk sharing, and dynamic transition in the growth path. This paper places his argument on the duality and risk sharing in an analytical framework and rephrases its implications.
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Workers' abilities are hidden information. Thus, when hiring, firms first use education as a proxy for abilities, and then learn about workers' abilities by tracking products. If this learning is asymmetric inside and outside... more
Workers' abilities are hidden information. Thus, when hiring, firms first use education as a proxy for abilities, and then learn about workers' abilities by tracking products. If this learning is asymmetric inside and outside major firms' internal labor markets, the market expects work experience and schooling to be complements for experience before workers gain long-term employment, which hides the learning effect. Once workers gain longterm employment, the learning effect becomes evident. Furthermore, the employer learns more quickly in the early stages of internal career, and this privately learned information could improve the efficiency of in-house training programs.
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This paper investigates determinants of geographic distribution of share tenancy and analyzes its efficiency implications in pre-war Iwate prefecture, Japan. The distribution of share tenancy was attributable to risk represented by yield... more
This paper investigates determinants of geographic distribution of share tenancy and analyzes its efficiency implications in pre-war Iwate prefecture, Japan. The distribution of share tenancy was attributable to risk represented by yield variability, which in turn was affected by seasonal winds called Yamase and topographic features. That risk raised transaction costs of adopting a fixed-rent tenancy associated with the common custom of rent reduction in Japan that mitigated the problem of risksharing. Estimation results suggest that risk, wealth, and strength of community ties were the main determinants of contract choice.
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Transition between private governance mechanism and the state court is not necessarily unidirectional. This research assumes that non-monotonic changes in governance mechanism comes from complementarity between the private and public... more
Transition between private governance mechanism and the state court is not necessarily unidirectional. This research assumes that non-monotonic changes in governance mechanism comes from complementarity between the private and public mechanisms when neither of both is sufficiently efficient. Then it studies transition of governance in the labor market of Japanese silk-reeling industry from the 1890s to the 1920s, which rapidly grew then and often showed poaching, and ascertains that employers first had recourse to the court for enforcement of employment contract, they second built private mechanisms for settlement backed by the court, and third abandoned the private mechanism.
Free competition in product markets is a common characteristic in capitalist economies. Meanwhile, regulations on the land, labour, and financial markets have changed over time in each capitalist economy and are distinct. We address this... more
Free competition in product markets is a common characteristic in capitalist economies. Meanwhile, regulations on the land, labour, and financial markets have changed over time in each capitalist economy and are distinct. We address this issue in the Japanese context. Medieval Japan under the second shogunate of Muromachi in the fourteenth century instituted a free competition regime for land, labour, and financial markets. An outcome was wealth inequality and social destabilization. The third shogunate of Edo vested peasants with property rights and regulated the land, labour, and financial market to maintain them as owner-farmers. The regime created an institutional arrangement where the stem farming family functioned as the centre of resource allocation. Deregulation after the Meiji Restoration of 1868 weakened the family-focused arrangement but did not entirely remove it. Traits of the family-focused arrangement form the specific characteristic of modern Japanese capitalism.
The signaling role of schooling decreases as employers lear n about workers’ abilities from their experience. Since learning is asymmetric between cur rent and potential employers, the market expects that experience and schooling be... more
The signaling role of schooling decreases as employers lear n about workers’ abilities from their experience. Since learning is asymmetric between cur rent and potential employers, the market expects that experience and schooling be complem ents for workers who have not been promoted, which hides the learning effect, and be su stit tes for promoted workers. This market expectation in turn affects workers’ skill acquisition. Due to asymmetric learning and its effects on skill acquisition, (1) the emplo yer learning effect is hidden during experience outside of internal labor markets and (2) is a pparent within internal labor markets, but (3) attenuates with tenure upon joining intern al labor markets.