Analysis of Various Subsidies by Local Governments for the COVID-19’s Disaster

The first cases of the COVID-19 appeared in Japan in January 2020. The number of infected persons has increased and decreased, and as of October 11, 2021, the fifth wave became under control.The four emergency declarations by the Japanese government that have been issued so far have included restricting business by restaurants and tourist agencies. Legally imposing opening and closing hours and other measures naturally have a negative impact on the restaurant business. Therefore, the government offered subsidies to the business sector, such as subsidies for sustainability and monthly subsidies, as well as loans through financial institutions (including subordinated loans). In addition to the subsidies led by the government, these subsidies were also implemented by local governments, such as prefectures and municipalities, but the implementation of these subsidies by municipalities has differed from region to region, and the overall picture is still unclear. This paper examines the actual conditions and characteristics of various subsidy programs implemented by local governments throughout Japan using principal component analysis to classify the subsidy programs of local governments (up to the third principal component). The main findings are as follows; Firstly, the first principal component was interpreted as the “all-or-nothing subsidy implementation type,” the second principal component was interpreted as the “tourism support, infection control, and other local revitalization type,” and the third principal component was interpreted as the “fixed cost, employment subsidy type, and local business support type”. Secondly, although the policies of local governments in response to COVID-19 are complementary to government subsidies, it is clear that they are mainly used to “support the sustainability of local industries,” including support for tourism, infection control, and various fixed costs (for private companies).