IDEAS home Printed from https://ideas.repec.org/a/bla/coecpo/v27y2009i2p147-163.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1465-7287.2008.00115.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1465-7287.2008.00115.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Richard Blundell & Ian Walker, 1986. "A Life-Cycle Consistent Empirical Model of Family Labour Supply Using Cross-Section Data," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 53(4), pages 539-558.
    2. Altonji, Joseph G, 1986. "Intertemporal Substitution in Labor Supply: Evidence from Micro Data," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 176-215, June.
    3. Eric French, 2005. "The Effects of Health, Wealth, and Wages on Labour Supply and Retirement Behaviour," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(2), pages 395-427.
    4. Gustman, Alan L & Steinmeier, Thomas L, 1986. "A Structural Retirement Model," Econometrica, Econometric Society, vol. 54(3), pages 555-584, May.
    5. John Rust & Christopher Phelan, 1997. "How Social Security and Medicare Affect Retirement Behavior in a World of Incomplete Markets," Econometrica, Econometric Society, vol. 65(4), pages 781-832, July.
    6. Charles Blackorby & David Donaldson & David Moloney, 1984. "Consumer's Surplus and Welfare Change in a Simple Dynamic Model," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(1), pages 171-176.
    7. Hideo Akabayashi, 2006. "The labor supply of married women and spousal tax deductions in Japan—a structural estimation," Review of Economics of the Household, Springer, vol. 4(4), pages 349-378, December.
    8. Burtless, Gary & Moffitt, Robert A, 1985. "The Joint Choice of Retirement Age and Postretirement Hours of Work," Journal of Labor Economics, University of Chicago Press, vol. 3(2), pages 209-236, April.
    9. Leora Friedberg, 2000. "The Labor Supply Effects of the Social Security Earnings Test," The Review of Economics and Statistics, MIT Press, vol. 82(1), pages 48-63, February.
    10. Browning, Martin & Deaton, Angus & Irish, Margaret, 1985. "A Profitable Approach to Labor Supply and Commodity Demands over the Life-Cycle," Econometrica, Econometric Society, vol. 53(3), pages 503-543, May.
    11. MaCurdy, Thomas E, 1981. "An Empirical Model of Labor Supply in a Life-Cycle Setting," Journal of Political Economy, University of Chicago Press, vol. 89(6), pages 1059-1085, December.
    12. Hoynes, Hilary Williamson, 1996. "Welfare Transfers in Two-Parent Families: Labor Supply and Welfare Participation under AFDC-UP," Econometrica, Econometric Society, vol. 64(2), pages 295-332, March.
    13. Keen, Michael, 1990. "Welfare analysis and intertemporal substitution," Journal of Public Economics, Elsevier, vol. 42(1), pages 47-66, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. 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.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Daniel Aaronson & Eric French, 2004. "The Effect of Part-Time Work on Wages: Evidence from the Social Security Rules," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 329-352, April.
    2. Keane, Michael, 2010. "The Tax-Transfer System and Labour Supply," MPRA Paper 55167, University Library of Munich, Germany.
    3. Michael P. Keane, 2011. "Labor Supply and Taxes: A Survey," Journal of Economic Literature, American Economic Association, vol. 49(4), pages 961-1075, December.
    4. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695, Elsevier.
    5. Keane, Michael P., 2022. "Recent research on labor supply: Implications for tax and transfer policy," Labour Economics, Elsevier, vol. 77(C).
    6. Eric French, 2005. "The Effects of Health, Wealth, and Wages on Labour Supply and Retirement Behaviour," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(2), pages 395-427.
    7. Haan, Peter & Prowse, Victoria, 2014. "Longevity, life-cycle behavior and pension reform," Journal of Econometrics, Elsevier, vol. 178(P3), pages 582-601.
    8. Selahattin Imrohoroglu & Sagiri Kitao, 2010. "Social Security, Benefit Claiming and Labor Force Participation: A Quantitative General Equilibrium Approach," Working Papers, Center for Retirement Research at Boston College wp2010-02, Center for Retirement Research, revised Mar 2010.
    9. Eric French & John Bailey Jones, 2011. "The Effects of Health Insurance and Self‐Insurance on Retirement Behavior," Econometrica, Econometric Society, vol. 79(3), pages 693-732, May.
    10. R. Jason Faberman, 2010. "Revisiting the role of home production in life-cycle labor supply," Working Papers 10-3, Federal Reserve Bank of Philadelphia.
    11. H. Benitez-Silva & F. Heiland, 2008. "Early claiming of social security benefits and labour supply behaviour of older Americans," Applied Economics, Taylor & Francis Journals, vol. 40(23), pages 2969-2985.
    12. Hugo Benitez-Silva & Na Yin, 2007. "An Empirical Study of the Effects of Social Security Reforms on Claming Behavior and Benefits Receipt Using Aggregate and Public-Use Administrative Micro Data," Department of Economics Working Papers 07-05, Stony Brook University, Department of Economics.
    13. Martinez-Granado, Maite, 2005. "Testing labour supply and hours constraints," Labour Economics, Elsevier, vol. 12(3), pages 321-343, June.
    14. Woodland, A., 2016. "Taxation, Pensions, and Demographic Change," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 713-780, Elsevier.
    15. Hugo Benitez-Silva & Frank Heiland, 2006. "The Social Security Earnings Test Revisited: Information, Distortions, and Costs," Department of Economics Working Papers 06-04, Stony Brook University, Department of Economics.
    16. Daniel Aaronson & Eric French, 2009. "The Effects of Progressive Taxation on Labor Supply when Hours and Wages Are Jointly Determined," Journal of Human Resources, University of Wisconsin Press, vol. 44(2).
    17. David Domeij & Martin Floden, 2006. "The Labor-Supply Elasticity and Borrowing Constraints: Why Estimates are Biased," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 9(2), pages 242-262, April.
    18. Michael Keane & Timothy Neal, 2021. "Robust Inference for the Frisch Labor Supply Elasticity," Discussion Papers 2021-07b, School of Economics, The University of New South Wales.
    19. Alessie, R.J.M. & Kapteyn, A.J., 1986. "Consumption, savings and demography," Research Memorandum FEW 238, Tilburg University, School of Economics and Management.
    20. Richard Rogerson & Johanna Wallenius, 2019. "Household Time Use among Older Couples: Evidence and Implications for Labor Supply Parameters," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 134(2), pages 1079-1120.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:coecpo:v:27:y:2009:i:2:p:147-163. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/weaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.