Municipal Amalgamation Effect on Expenditure for Elderly

Abstract

　This paper investigates the municipal amalgamation effect on expenditure for elderly in Japan. We focus on the expenditure for elderly for the following reasons. First, the expenditure for elderly has private goods character, which is different from total expenditure studied in previous studies. Second, the municipal amalgamation effect gives suggestions for association policy (cooperation with municipalities) for elderly care in Japan. Our approaches are DID (difference in differences) and Matching estimations used in policy evaluation in Economics (Reingewertz (2012), Miyazaki (2013), Abadie and Imbens (2004, 2006, 2011) ) by using municipal-level panel date from 2000-09 (1707X10). We found that the municipal amalgamation effect on expenditure for elderly does not have a cost reduction effect found in the previous studies focusing on total expenditure (Reingewertz (2012), Miyazaki (2013) ). Conversely, the effect on expenditure for elderly has an increasing effect due to private goods character, which does not produce economies for scale in comparison with public goods.