Outcaste Politics and Organized Crime in Japan: The Effect of Terminating Ethnic Subsidies

Harvard Law School John M. Olin Center Discussion Paper No. 932

Kelley School of Business Research Paper No. 17-68

56 Pages Posted: 11 Sep 2017

See all articles by J. Mark Ramseyer

J. Mark Ramseyer

Harvard Law School

Eric Bennett Rasmusen

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy

Multiple version iconThere are 2 versions of this paper

Date Written: September 7, 2017

Abstract

In 1969, Japan launched a massive subsidy program for the "burakumin" outcastes. The subsidies attracted the mob, and the higher incomes now available through organized crime compensated those burakumin who abandoned the legal sector for criminal careers. In the process, the subsidies gave new support to the tendency many Japanese already had to equate the burakumin with the mob.

The government ended the subsidies in 2002. We explore the effect of the termination by merging 30 years of municipality data with a long-suppressed 1936 census of burakumin neighborhoods. First, we find that outmigration from municipalities with more burakumin increased after the end of the program. Apparently, the higher illegal income generated by the subsidies had restrained young burakumin from joining mainstream society. Second, we find that once the mob-tied corruption and extortion associated with the subsidies neared its end, real estate prices rose in municipalities with burakumin neighborhoods. With the subsidies gone and the mob in retreat, other Japanese found the formerly burakumin communities increasingly attractive places to live.

Keywords: organized crime; discrimination; outcastes; government subsidies

JEL Classification: H30, I26, I38, J49, K14, K38, K42

Suggested Citation

Ramseyer, J. Mark and Rasmusen, Eric Bennett, Outcaste Politics and Organized Crime in Japan: The Effect of Terminating Ethnic Subsidies (September 7, 2017). Harvard Law School John M. Olin Center Discussion Paper No. 932; Kelley School of Business Research Paper No. 17-68. Available at SSRN: https://ssrn.com/abstract=3033266

J. Mark Ramseyer (Contact Author)

Harvard Law School ( email )

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Eric Bennett Rasmusen

Indiana University - Kelley School of Business - Department of Business Economics & Public Policy ( email )

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