Total factor productivity and the convergence of disparities in Japanese regions
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Japan’s regional economies face global competition amidst the challenges of a declining and aging population. Given such economic conditions, Japan’s total factor productivity (TFP) requires boosting to achieve competitiveness in regional economies. Although labor productivity is a popular measure for the analysis of productivity and has been a focus of prior studies, TFP’s comprehensiveness is a preferable measure. This study measures TFP using regional data from Japan and tests if the convergence of regional TFP disparities can be detected since 1980. The results show that TFP has continually increased and converged to reduce regional disparities over the study period. We perform statistical analysis of the regional convergence in TFP using a stochastic convergence model and find that TFP converged at each region’s stationary level, not at the nationwide unique level. These results provide policy implications for Japan’s regional economies.
JEL ClassificationO4 O53 R11
The authors are grateful to anonymous reviewers for their helpful comments and suggestions. This work was supported by a Japan Society for the Promotion of Science (JSPS) Grant-in-Aid for Scientific Research (KAKENHI) 15K17067.
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