Government Spending, Recession, and Suicide: Evidence from Japan

Abstract

Backgrounds: Austerity has been shown to have an adverse influence on people’s mental health and suicide rates. Most existing studies have focused on the governments’ reactions to a single event, for example, the Great Recession of 2008. Methods: This study focused on a significant change in fiscal policy between 2001 and 2014 in Japan. The size of expenditures by national and local governments decreased dramatically between 2001 and 2006 under the neoliberalism reform and then increased after the global economic crisis and the Great East Japan Earthquake. Using the data from 47 prefectures between 2001 and 2014, we tested whether more massive spending by the local governments was associated with a lower suicide rate in their jurisdiction. We also investigated whether this relationship was particularly robust during a more severe recession. Results: Our analysis revealed that an increase of 1% in the per-capita local government expenditures was associated with a decrease of 0.2% in the suicide rates among males and females aged between 40 and 64 and that this correlation was strengthened as the unemployment rate increased. Conclusions: Government’s reaction to economic crises can either exacerbate or mitigate the negative impact of the economic recession on people’s mental health and suicide rates.