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The Effects Of The 1.03 Million Yen Ceiling In A Dynamic Labor Supply Model

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  • YUKIKO ABE

Abstract

In this paper I examine the effects of a means‐tested transfer system in Japan (“1.03 million yen ceiling”) in a dynamic labor supply model with endogenous retirement. In Japan, married women have reason to limit their annual earnings to no more than 1.03 million yen in order to receive a number of benefits available to low‐income wives, and in fact often choose to do so. In a dynamic model, the optimal labor supply schedule follows a pattern that is not seen in a static framework, which I call the “spillover effect.” The paper also examines the properties of dynamic welfare cost of this ceiling. (JEL J22, H24, H55)

Suggested Citation

  • Yukiko Abe, 2009. "The Effects Of The 1.03 Million Yen Ceiling In A Dynamic Labor Supply Model," Contemporary Economic Policy, Western Economic Association International, vol. 27(2), pages 147-163, April.
    • Handle: RePEc:bla:coecpo:v:27:y:2009:i:2:p:147-163
    DOI: 10.1111/j.1465-7287.2008.00115.x
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    References listed on IDEAS

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    Cited by:

    1. Bessho, Shun-ichiro & Hayashi, Masayoshi, 2014. "Intensive margins, extensive margins, and spousal allowances in the Japanese system of personal income taxes: A discrete choice analysis," Journal of the Japanese and International Economies, Elsevier, vol. 34(C), pages 162-178.
    2. Takashi Oshio & Kayo Nozaki & Miki Kobayashi, 2013. "Division of Household Labor and Marital Satisfaction in China, Japan, and Korea," Journal of Family and Economic Issues, Springer, vol. 34(2), pages 211-223, June.
    3. Tomoki Ogasa, 2019. "Income Redistribution Effect of a Shift from Income Deduction to Tax Credit -Discrete Choice Model-Based Simulation Incorporating Labor Supply-," Discussion papers ron313, Policy Research Institute, Ministry of Finance Japan.
    4. Eiji Yamamura, 2014. "The effect of young children on their parents’ anime-viewing habits: evidence from Japanese microdata," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 38(4), pages 331-349, November.
    5. Jun Ando, 2021. "Wives’ gender identity, work hours, employment status, and life satisfaction: evidence from Japan," International Journal of Economic Policy Studies, Springer, vol. 15(1), pages 103-124, February.
    6. Shingo Takahashi, 2010. "A Structural Estimation of the Effects of Spousal Tax Deduction and Social Security Systems on the Labor Supply of Japanese Married Women," Working Papers EMS_2010_08, Research Institute, International University of Japan.
    7. Yokoyama, Izumi, 2018. "How the tax reform on the special exemption for spouse affected the work-hour distribution," Journal of the Japanese and International Economies, Elsevier, vol. 49(C), pages 69-84.
    8. Yamamura, Eiji, 2013. "Externality of young children on parents’ watching of anime: Evidence from Japanese micro data," MPRA Paper 46878, University Library of Munich, Germany.
    9. Oshio, Takashi & 小塩, 隆士 & Nozaki, Kayo & Kobayashi, Miki, 2011. "Division of Household Labor and Marital Satisfaction in China, Japan, and Korea," PIE/CIS Discussion Paper 502, Center for Intergenerational Studies, Institute of Economic Research, Hitotsubashi University.
    10. Abe, Yukiko, 2011. "Family labor supply, commuting time, and residential decisions: The case of the Tokyo Metropolitan Area," Journal of Housing Economics, Elsevier, vol. 20(1), pages 49-63, March.

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    More about this item

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions

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