The rural areas in Japan are currently facing a critical situation: Depopulation and an aging society. Following the phenomenon that job opportunity has concentrated in urban areas, more young people left their hometown. This issue affects the primary industry which consists of agriculture, forestry, and fishery due to the characteristics requiring large amount of labor and land. Aged farmers may have to give up on their farmland without others succeeding their business. In addressing this situation, in 2014, the Japanese government created a milestone policy “Chihou-sousei (Regional Revitalization)”. In this research, I examine the effect of the succession rate of farmland on the local economic development under various modeling scenarios. The result indicates a mixed relationship between the succession rate and local economic development: Negative impact on GDP and mixed impacts on unemployment varying by specifications. The existence of control variables including age, population, gender proportion and education also played a role in explaining economic performance. For future study in this topic, it is recommended to consider the role of policies particularly relevant with the succession rate and other regional revitalization factors, rather than too optimistically justifying its potential on the surface.
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