The Use of Performance Measures in Japanese Local Government: An Empirical Analysis of Impact on Budgets

Abstract

Generalized as a result of the Japan Revitalization Strategy and the Act for Overcoming Population Decline and Vitalizing Local Economy, the use of performance measures have expanded in Japanese local governments. However, few studies have examined the effect of performance measures on budgets for programs. In this study, we quantitatively investigate the impact. Our study develops hypotheses that strategic priorities by performance measures increase budgets and that the effect continues for an extended period. For demonstration, we use the Propensity Score Matching and the Difference-in-Differences analysis. The current findings indicate that performance measures can increase budgets despite political context and incrementalism. Our results also reveal that the effect of performance measures does not continue perpetually. It may be necessary to set additional performance measures, cascaded into target years.