Downward equality and equity in Japanese higher education and the initiative of internationalization – Is fiscal policy efficient?

• In Event: Changes in in higher education and TVET

Proposal

Abstract

Although higher education (HE) conditions in Japan have gradually improved, Japanese university students’ circumstances worsened during the COVID-19 pandemic. Furthermore, immigration restrictions drastically reduced the expected numbers of foreign students and the resulting revenues. From 2020 to 2023, Japanese HE institutions also decreased new enrollments, posing a high risk for universities’ fiscal management. This all threatened the quality of education being provided. Despite the existence of a fiscal policy in national HE, there was an urgent need for the government to address students’ inequality, inequity, and the lack of internationalization. Thus, they introduced scholarships and tuition fee exemptions and provided personal computers to school students, as well as economic assistance. The Japanese government also implemented internationalization schemes to accept 312,000 foreign students in 2019.

This study investigates the influence of government fiscal policies in achieving renewed internationalization and reduced inequality and inequity within Japan’s HE system. We obtained data-set material from the Ministry of Education, Science, Culture and Sports’ annual school basic research, e-Stat Portal Site of the Official Statistics of Japan, National Institute for Academic Degrees and Quality Enhancement of Higher Education, and National University’s Budget Report. We conducted a macro and micro-analysis of equity and equality in HE yearly from 2019 to 2023. This portrayed the public and private universities’ education industry. Through a correlation and coefficient analysis, we scrutinized student dropouts due to household income level, and the efficiency of scholarship and tuition fee exemption policies.

This study is the first to research the resurgence of internationalization following the pandemic, existing poverty levels, and whether Japan’s newly introduced fiscal policies can combat these problems. We analyzed scholarship types, household income levels, and labor market effects, and set the poverty line at three million yen,. We also investigated and compared fiscal policies for international and local university students. This included transactions, policies, and international student revenues. We used a regression model to analyze data on national financial support from 2018 to 2022, in relation to per capita GDP and national equity levels, using the Durbin-Watson ratio, adjusted R2, and confidence intervals.

According to the micro-analysis of all national university suspension data, the government’s university budget and subsidies significantly reduced the number of student dropouts. In 2020, the government allocated 1.2 trillion yen to 86 national universities, and 400 billion yen in subsidies and scholarships to 500 private universities. To some extent, the subsidies, tuition fee exemptions, and per capita GDP proved effective. Scholarships, however, are limited to households with an income below three million yen and no residual tax obligations. Therefore, some households’ income remains below the regression line, leading to “student poverty” and accumulated debt after graduation. The government also introduced a new budget scheme to increase the number of international and Japanese students, and reduced border restrictions, but these are still insufficient.

In summary, this study analyzed the effects of changes in Japanese HE policy on universities and the promotion of student welfare. This helped stabilize revenue and improve student benefits, positively improving the economic climate and reducing student dropouts. However, the government needs to find ways to improve households’ employment and overall income levels. Household and student income levels are crucial for preventing poverty and dependent on a good labor market. The labor market is gradually shifting in favor of students, offering better job opportunities, thereby improving income levels. A potential future research avenue is to evaluate how an increase in employment among new graduates and the changing job landscape impacts poverty. Fiscal policies to create job opportunities is another important factor that will help prevent long-term student poverty.


References
Bettinger, E. P., Long, B. T., Oreopoulos, P., & Sanbonmatsu, L. (2012). The role of application assistance and information in college decisions: Results from the H&R Block FAFSA experiment. The Quarterly Journal of Economics, 127(3), 1205–1242. https://doi.org/10.1093/qje/qjs017
Carruthers, C. K., & Welch, J. G. (2019). Not whether, but where? Pell Grants and college choices. Journal of Public Economics, 172, 1–19. https://doi.org/10.1016/j.jpubeco.2018.11.006
Denning, J. T., Marx, B. M., & Turner L. J. (2019). ProPelled: The effects of grants on graduation, earnings, and welfare. American Economic Journal: Applied Economics, 11(3), 193–224. https://doi.org/10.1257/app.20180100
Duflo, E., & Banerjee, A. (2011). Poor economics. Hachette Book Group, Inc.
Dynarski, S., Page, L. C., & Scott-Clayton, J. (2022). College costs, financial aid, and student decisions (Working Paper No. 30275). National Bureau of Economic Research. http://www.nber.org/papers/w30275
Dynarski, S., & Scott-Clayton, J. E. (2006). The cost of complexity in federal student aid: Lessons from optimal tax theory and behavioral economics. National Tax Journal, 59(2), 319–356. https://doi.org/10.17310/ntj.2006.2.07
Fumitake, F. (2021). The financing of higher education in Japan. In Handbook of higher education in Japan (pp. 109–121). Amsterdam University Press.
Japan Student Services Organization (JASSO). (2020, October 25). 2020 scholarship program release.
Ministry of Education, Culture, Sports, Science and Technology (MEXT). (2020). Fiscal budget statistics.
Toutkoushian, R. K., & Paulsen, M. B. (2016). Economics of higher education: Background, concept, and applications (1st ed). Springer.

Author

• Masaru Fujikawa, Okayama University