Estimating Frisch Labor Supply Elasticity in Japan
AbstractUsing Japanese data from the 1990s aggregated by prefecture, age group, and sex, we estimate Frisch labor supply elasticity, which has been seldom estimated in Japan. The change in labor supply can be decomposed into two labor-supply behaviors: extensive margin, indicating workersf entry and exit from the labor market; and intensive margin, indicating changes in hours of work in response to a wage change. Our estimates of the Frisch elasticity on the extensive and intensive margins combined are in the range of 0.2 to 0.7 for males, 1.3 to 1.5 for females, and 0.7 to 1.0 for both sexes. Our estimates of the Frisch elasticity on only the intensive margin are in the range of 0.1 to 0.2 for all three categories. These results suggest that extensive margin explains the bulk of labor-supply changes in Japan. As for the changes in the estimates of the Frisch elasticity in Japan from the 1990s, it has been either unchanged or in a declining trend on the extensive and intensive margins combined, either unchanged or in a slight rising trend on only the intensive margin, and in a declining trend on only the extensive margin.
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Bibliographic InfoPaper provided by Institute for Monetary and Economic Studies, Bank of Japan in its series IMES Discussion Paper Series with number 07-E-05.
Date of creation: Apr 2007
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Labor supply; Frisch elasticity; Extensive margin; Intensive margin;
Other versions of this item:
- Kuroda, Sachiko & Yamamoto, Isamu, 2008. "Estimating Frisch labor supply elasticity in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 22(4), pages 566-585, December.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-04-28 (All new papers)
- NEP-LAB-2007-04-28 (Labour Economics)
- NEP-MAC-2007-04-28 (Macroeconomics)
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