Rural tourism promotion policy and rural hospitality enterprises performance: Empirical evidence from Japan

Abstract

Increased tourism demand provides an opportunity to boost rural development. This paper examines the impact of rural tourism policy reform on hospitality and restaurant enterprises in rural areas in Japan. In early 2016, the Japanese government introduced a policy to encourage the participation of nonfarm enterprises in the rural hospitality industry. Using a nationally representative dataset of rural hospitality enterprises in Japan, we employ the difference‐in‐differences method to assess the causal effects of the policy on the sales value, number of business days, and labor productivity of hospitality enterprises and restaurants in rural areas. We find that this reform resulted in a 15.6% increase and a 5.1% decrease in the sales value of nonfarm‐owned and farm‐owned homestay enterprises, respectively. Moreover, changes in the number of business days and labor productivity can be associated with the policy effect. We also find a significant policy effect on nonfarm‐owned restaurants. [EconLit Citations: Q12, Q13].