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The labor supply of married women and spousal tax deductions in Japan—a structural estimation

  • Hideo Akabayashi

    ()

The Japanese tax system offers an opportunity to investigate the labor supply response of married women to the income tax and the intrahousehold resource allocation mechanism, since the deductible amount from the husband’s income decreases as the wife’s earnings increase. Using cross-section data, I structurally estimate the labor supply of married women under the piece-wise linear budget constraint created by the Japanese tax and social security system. I find that the wife’s labor supply response to her husband’s decreasing deduction tends to be greater than the response to her own income tax. This suggests that not only the unitary model is rejected but also that female labor is allocated inefficiently within a family. Finally, this study shows that the choice of household model affects the predicted effect of policy reform and that the currently proposed reforms will have less of an effect on the labor supply of married women than previous studies claim. Copyright Springer Science+Business Media, LLC 2006

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File URL: http://hdl.handle.net/10.1007/s11150-006-0012-5
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Article provided by Springer in its journal Review of Economics of the Household.

Volume (Year): 4 (2006)
Issue (Month): 4 (December)
Pages: 349-378

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Handle: RePEc:kap:reveho:v:4:y:2006:i:4:p:349-378
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=109451

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  1. Blundell, Richard & Ham, John & Meghir, Costas, 1987. "Unemployment and Female Labour Supply," Economic Journal, Royal Economic Society, vol. 97(388a), pages 44-64, Supplemen.
  2. Vermeulen, F.M.P. & Bargain, O. & Beblo, M. & Beninger, D. & Blundell, R. & Carrasco, R. & Chiuri, M-C. & Laisney, F. & Lechene, V. & Moreau, N. & Myck, M. & Ruiz-castillo, J., 2006. "Collective models of labor supply with nonconvex budget sets and nonparticipation : A calibration approach," Other publications TiSEM 8dec6b88-3dce-460f-ab9b-2, School of Economics and Management.
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  6. Schultz, T.P., 1990. "Testing The Neoclassical Model Of Family Labor Supply And Fertility," Papers 601, Yale - Economic Growth Center.
  7. Bargain, O. & Beblo, M. & Beninger, D. & Blundell, R. & Carrasco, R. & Chiuri, M-C. & Laisney, F. & Lechene, V. & Moreau, N. & Myck, M. & Ruiz-castillo, J. & Vermeulen, F.M.P., 2006. "Does the representation of household behavior matter for welfare analysis of tax-benefit policies? An introduction," Other publications TiSEM 70a5784b-4a23-4a6e-9a2a-5, School of Economics and Management.
  8. Denis Beninger & Olivier Bargain & Miriam Beblo & Richard Blundell & Raquel Carrasco & Maria-Concetta Chiuri & François Laisney & Valérie Lechene & Ernesto Longobardi & Nicolas Moreau & Michal Myck & , 2006. "Evaluating the Move to a Linear Tax System in Germany and Other European Countries," Review of Economics of the Household, Springer, vol. 4(2), pages 159-180, 06.
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  10. Duncan Thomas, 1990. "Intra-Household Resource Allocation: An Inferential Approach," Journal of Human Resources, University of Wisconsin Press, vol. 25(4), pages 635-664.
  11. Arthur van Soest, 1995. "Structural Models of Family Labor Supply: A Discrete Choice Approach," Journal of Human Resources, University of Wisconsin Press, vol. 30(1), pages 63-88.
  12. Shelly Lundberg & Robert A. Pollak, 2001. "Efficiency in Marriage," NBER Working Papers 8642, National Bureau of Economic Research, Inc.
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  14. Blomquist, Soren, 1995. "Restrictions in labor supply estimation: Is the MaCurdy critique correct?," Economics Letters, Elsevier, vol. 47(3-4), pages 229-235, March.
  15. Behrman, Jere R., 1993. "Intrahousehold distribution and the family," Handbook of Population and Family Economics, in: M. R. Rosenzweig & Stark, O. (ed.), Handbook of Population and Family Economics, edition 1, volume 1, chapter 4, pages 125-187 Elsevier.
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