The relationship between an economic downturn and people’s health has been extensively studied in a variety of disciplines. This topic has drawn increasing attention from scholars after the global economic crisis in 2008 [1,2,3]. Evidence on whether economic downturn improves or worsens people’s health is mixed, depending on the measures of health, demographic groups, levels of economic development, and the degree of downturns [1,2,3,4]. The results of previous studies are more consistent when we focus on mental health and suicidal risks as a measure of health: mental health worsens, and suicidal risks increase during the recession [5].
The adverse influence of the economic downturn on mental health and suicidal risks could be exacerbated or mitigated by government actions. This possibility became particularly evident in the aftermath of the 2008 Great Recession when many nations adopted fiscal austerity as a political reaction to the massive economic crisis [6,7,8]. Austerity in the period of the economic downturn can worsen people’s mental health in two major ways: by increasing economic insecurity among vulnerable individuals and by reducing healthcare services [9, 10]. Indeed, suicide rates increased after the Great Recession in countries where the austerity measures had been taken, including Greece, Ireland, Portugal, and Spain [11,12,13,14,15,16,17].
At the same time, the government can mitigate the effect of adverse economic shock by taking proper actions. For example, the amount of New Deal relief spending allocated to the US cities after the Great Depression between 1929 and 1940 was negatively correlated with the suicide rates of the area [18]. Similarly, the negative effect of the recessions on suicide rates was shown to be weakened in countries with relatively larger social welfare spending [19,20,21], though others reported no such relationship [22].
This study offers additional evidence on the role of the government’s actions to prevent suicide in the period of recession using longitudinal data from Japan. The study period is from 2001 to 2014, during which Japan experienced both the reduction and expansion of government expenditures under different administrations and political climates. More precisely, government expenditures significantly decreased under the neoliberal reform between 2001 and 2006 and then increased after the global economic crisis in 2008 and the Great East Japan Earthquake in 2011. In response to a severe recession that Japan experienced after the Asian financial crisis in the late 1990s, Junichiro Koizumi, who became the prime minister of Japan in 2001, adopted several major neoliberal reforms that downplayed the economic role of the government. Koizumi’s administration downsized the amount of government expenditures by up to 10% between 2001 and 2006, as compared to 2000. Such austerity measures, however, did not continue after Koizumi stepped down in 2006. The several administrations after Koizumi increased the amount of government expenditures mainly to stimulate economic activities after the Great Recession in 2008. In particular, Abe’s second administration (2012-) initiated various aggressive economic measures to recover from the long recession, including interventions that increased government spending on public infrastructure. In addition, the amount of public spending also expanded after the Great East Japan Earthquake in 2011 to mitigate its impact and to accelerate recovery from the disaster.
Thus, Japan has experienced both austerity and expansion as government policies over the last two decades. These policy changes at the national level also fundamentally affected the financial situation of subnational governments that relied heavily on fiscal transfers from the national government as a source of revenue. Prefectures and municipalities in Japan are administrative units that have independent sources of revenues, but about 30% of their total expenditures rely on a transfer from the national government. Thus, the amount of spending by local government crucially depends on the economic policies of the national government.
In particular, when Koizumi’s administration lowered the number of transfers from the central government to subnational governments as part of his neoliberal reform, the volume of spending by subnational government declined, as shown in Fig. 1. The solid line in Fig. 1 depicts the change in the total amount of expenditure by the national government between 2001 and 2014 using the amount in 2000 as a baseline [23]. The dashed line in Fig. 1 depicts the total amount of spending by local governments [24]. The figure indicates that local government expenditures were highly correlated with national government expenditures and that local government expenditures decreased until 2007 and then increased. Notably, Fig. 1 also shows that the overall crude suicide rate shown as a solid gray line declined rapidly just after the amount of national and local government spending increased.
This study used these changes in the amount of local government spending associated with the policy changes at the national level in Japan to understand how the level of government expenditures affects suicide rates. Using data from 47 prefectures between 2001 and 2014, we tested two hypotheses: (1) Higher spending by the local governments was correlated with the lower suicide rates in their jurisdictions, and (2) the negative relationship between local government spending and the suicide rates was particularly strong during a more severe recession.
Our study improves upon previous studies on the role of government expenditures on suicide by focusing on different time horizons and types and levels of policymaking [25]. First, the evidence presented here does not concern only the government reaction to a single event, such as the studies focusing on the Great Recession of 2008. We examined the impact of various government actions over a period of 14 years. Second, this is the first study on the association between government spending and suicide in a non-European country, whereas the existing literature focused primarily on European countries and the United States. Third, our study is not a cross-country analysis, which often faces a challenge to isolate the effect of government spending from other national-level policy changes. Because our study used subnational variations over time, we were able to use unit-specific and year-specific fixed effects and thus control for unit-specific time-invariant and country-specific characteristics.