Property Taxation and the Demand for Floor Space in Japan

This is the first study applying the econometric analysis of piecewise-linear budget constraints arising from space-linked property taxation to Japanese housing data. The model employed is the classical Hausman type with convex piecewise-linear budget constraints and fixed preferences. We estimate that if spaced-linked property taxation for newly built houses is abolished, it would then eliminate a current excess tax burden per household of approximately 25,000 yen.Nonlinear budget constraints, Property taxation, Housing demand, Floor space, Japan

Estimating Consumer Valuation of Earthquake Risk: Evidence from Japanese Housing Markets

The relationships between seismic risk and rental and owner- occupied housing prices in the whole of Japan are examined. The empirical results from hedonic regressions with earthquake risk indices suggest that: (1) earthquake occurrence probability has a significantly negative effect on monthly housing rent, (2) the effect of earthquake probability seems to depend on the characteristics of the individual housing unit (e.g. age of dwelling) for owner-occupied housing, (3) the estimated risk premium is much larger for older buildings, and (4) the share of quake-resistant dwellings in the neighborhood area is significantly and positively related to the housing price of the individual unit. These results suggest that anti-seismic policies that target specific groups of dwellings, such as rental houses and older buildings, help to mitigate welfare loss due to earthquakes.Earthquake; Hedonic price model; Risk premium

Downward-sloping term structure of lease rates: a puzzle

A model of the term structure of lease rates in a frictionless economy is developed and its predictions are compared with data on residential leases in Japan. The model shows that the initial lease rate for a cancellable lease must be set higher than that for a non-cancellable lease because the former rate will be repeatedly adjusted downward when the market rent decreases. More importantly, the term structure of lease rates is always upward-sloping for cancellable leases. Empirical findings show a sharp contrast with the theory. Fixed-term lease rates are often higher than open-ended long-term lease rates. Moreover, in the fixed-term lease sample, the term structure of lease rates is downward-sloping. The term structure is also heterogeneous by tenant’s income

Downward-sloping term structure of lease rates: a puzzle

A model of the term structure of lease rates in a frictionless economy is developed and its predictions are compared with data on residential leases in Japan. The model shows that the initial lease rate for a cancellable lease must be set higher than that for a non-cancellable lease because the former rate will be repeatedly adjusted downward when the market rent decreases. More importantly, the term structure of lease rates is always upward-sloping for cancellable leases. Empirical findings show a sharp contrast with the theory. Fixed-term lease rates are often higher than open-ended long-term lease rates. Moreover, in the fixed-term lease sample, the term structure of lease rates is downward-sloping. The term structure is also heterogeneous by tenant’s income

Intergenerational Correlation of Household Wealth : Evidence from the JHPS Second-Generation Supplement

IPSE DP 2021F00

Japanese Housing Tenure Choice and Welfare Implications after the Revision of the Tenant Protection Law

Housing tenure choice, Rental housing, Rent control, Japan and deregulation, Conditional logit, Sample selection bias, Compensating variation, R21, C51, K12,