Trade-off between Economic Revitalization and Social Capital: Application of Structural Equation Model in Japan

An income inequality has been expanded in Japan and some policy is highly needed to revitalize rural areas. This study aims to show causative factors on regional satisfaction level by the estimation of the structural equation model (SEM) with data of each town in Yamagata and Yamaguchi prefectures. Results demonstrate that (i) both the economic situations and social capital (represented by trust, altruistic moral and human network) positively affected the satisfaction level, but there is a trade-off between these effects, (ii) public facilities can increase satisfaction level as long as these facilities are built with consideration of residents' needs and quality, and (iii) the economic factor and social capital have indirect effects, affecting to satisfaction via other factors, and there are some trade-off effects within the indirect paths. Hence, regional economic gaps can be alleviated by the social capital that is highly maintained in less favored areas. The same tendency as above is shown in both prefectures, so it can be said that these factors are possibly general in Japan.