Effects of Aggregate Shocks on the Productivity of Farm Households in Prewar Japan

抄録

An economic crisis can be considered as a man-made disaster with the characteristics as an aggregate shock, thus complicating and hindering mutual insurance or help in local communities. This paper investigates the dynamics of productivity in prewar rural Japan and examines which farm households were more vulnerable to the Great Depression, as a representative example of aggregate shocks that have a serious impact on rural sectors. First, using panel data from farm households collected by the Imperial Agricultural Association (Teikoku Nokai), we measured the Malmquist productivity index (MPI) and decomposed it into technical change and efficiency change for the period of 1924-1933. Second, with this panel data, we investigated which farm households were more vulnerable to aggregate shocks. Our main findings are as follows. First, although the MPI declined rapidly after the Great Depression due to the technical and efficiency change, this rapid decline in productivity was temporary. Second, the vulnerability of farm households to aggregate shocks differed by region, and large-scale farmers were relatively robust to them. These differences in vulnerability across farm size may have triggered the structural changes in Japan’s prewar agriculture after the Great Depression. Our findings shed light on the dynamics of farm household behavior in prewar Japan from the micro and quantitative perspectives.