Under the current fiscal conditions in many local, regional as well as the national government, the public schools face the substantial budget short falls . In order to alleviate the substantial budget shortage, it is important to raise efficiency, particularly in primary education as the costs...

This paper explores the mutual reference behavior of local governments in Japan. The Japanese public education system was decentralized in the previous decade. For example, actual fixed number of classes was relaxed in 2001 and 2003. This relaxation of regulations caused an increase in the...