2017 Volume 40 Issue 4 Pages 33-41
For decades, new or additional construction of manufacturing establishments in the central area of Japan's capital region (Tokyo metropolitan area) had been banned due to the “Act Concerning the Industry Restriction in the Built-up Area of the National Capital Region.” In this paper, I examine the effect of the act, completely abolished in 2002, using district-level panel data of a manufacturing census. In order to identify the effect, Difference-in-Differences estimation is employed, regarding the partial abolishment in 1999 as a natural experiment and comparing the changes between the deregulated area as a treatment group and yet-regulated area as a control group. The estimation shows significant increase of the density of establishments and shipment value per establishment within the deregulated area, so that the act might have failed to achieve an efficient land use in the region.
