Dreams of Urbanization: Quantitative Case Studies on the Local Impacts of Nuclear Power Facilities Using the Synthetic Control Method

Abstract

This paper uses the synthetic control (SC) method to examine how the establishment of Nuclear Power Facilities (NPFs) in Japan in the 1970s and 1980s has affected local per capita income levels in the municipalities in which they were located (NPF municipalities). Eight quantitative case studies using the SC method clarify that the effects of NPF establishment on per capita taxable income levels are highly heterogeneous. The estimated effects are often economically meaningful and in some cases huge: the income level was 11% higher on average and 62% higher in one municipality in 2002 when compared with counterfactual units. On the other hand a few of the NPF municipalities have received only weak or negligible effects from NPF establishment. The post-estimation comparisons of employment between the NPF municipalities and the SC units suggest that the size of the direct labor demand shocks and subsequent indirect employment effects on nontradable service sectors have contributed to the increase in per capita income levels.

Keywords: local income growth, local employment, nuclear power facilities, synthetic control method, quantitative case study

JEL Classification: H71, O18, R38, R53