The Pros And Cons Of Subsidy In Japan

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Starting from 2010, Japan experienced population loss due to the decreasing birth rate and low immigration rate. The declining population has the potential to reduce the economic growth due to the deficiency of labors and entrepreneurship. The article states that “the central government hopes to encourage marriage, aiming to improve the nation’s birthrate” by subsidizing the dating event called Konkatsu. Subsidy is any form of government support provided to the firms, to encourages the consumption and production of the goods. The subsidized market in this case is the dating event market. The event might become more available and affordable for the consumers after the subsidy is granted. The labor force might be enlarged as citizens are encouraged…show more content…
The government might reduce expenditure in other areas such as healthcare and education because subsidy is a burden on the budget. The government might also increase the tax rate in order to maintain the balance of their revenue, gaining pressure on the households who are not involved in the events. Unemployment rate might decrease significantly while the subsidy is granted but in the long run, the lack of public goods is harmful for the society. The advantage is that subsidy as an incentive, it motivates the companies that host dating events to invent productive ways boosting marriage rate, which makes the market more competitive. The weakness is that firm might become reliant on the subsidy and lose incentives to create better ways to promote marriage. Furthermore, it is not guaranteed that all participants will end up getting married. Government intervention limits personal freedom and public goods. If the tax rate is raised, the citizen that are not involved in the event still need to pay a high amount of tax without receiving any benefits. Although consumers, producers, and workers might receive benefits due to subsidy, it might lead to allocation inefficiency on the economy. As an excessive amount of resources and money are spent on the event, the provision of public goods might be lessened in order to balance government’s
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