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The Heterogeneous Impact of Post-Disaster Subsidies on Small and Medium Firms

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  • Yuzuka Kashiwagi

    (Waseda University)

Abstract

This paper examines the effect of Group Subsidy, which is a post-disaster subsidy for restoring and repairing facilities destroyed by great disasters, on the recovery of Japanese small- and medium-sized enterprises (SMEs) following the Great East Japan Earthquake. Group Subsidy was introduced in 2011 and continues to be reapplied in Japan. To assess the impact of this relatively new policy, we use rich firm-level data for firms in Japan that include information on supply-chain ties among them. Our estimates based on propensity score matching show that the subsidy was effective for the recovery of the performance of SMEs in the retail, manufacturing, construction, and energy sectors. However, the positive effect of the subsidy is largely reduced if the SMEs have links outside the disaster areas, except for firms in the construction and energy sector. In the service and wholesale sector, we find no significant difference between the recovery of SMEs with and without the subsidy.

Suggested Citation

  • Yuzuka Kashiwagi, 2020. "The Heterogeneous Impact of Post-Disaster Subsidies on Small and Medium Firms," Economics of Disasters and Climate Change, Springer, vol. 4(3), pages 601-623, October.
    • Handle: RePEc:spr:ediscc:v:4:y:2020:i:3:d:10.1007_s41885-020-00065-0
    DOI: 10.1007/s41885-020-00065-0
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