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

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  • Hideo Akabayashi

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Abstract

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

Suggested Citation

  • 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.
  • Handle: RePEc:kap:reveho:v:4:y:2006:i:4:p:349-378
    DOI: 10.1007/s11150-006-0012-5
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    References listed on IDEAS

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    Cited by:

    1. Eiji Yamamura, 2011. "Differences in the effect of social capital on health status between workers and non-workers," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 58(4), pages 385-400, December.
    2. repec:eee:japwor:v:42:y:2017:i:c:p:45-55 is not listed on IDEAS
    3. Bessho, Shun-ichiro & Hayashi, Masayoshi, 2011. "Labor supply response and preferences specification: Estimates for prime-age males in Japan," Journal of Asian Economics, Elsevier, vol. 22(5), pages 398-411, October.
    4. Minja Kim Choe & Larry L. Bumpass & Noriko O. Tsuya & Ronald R. Rindfuss, 2014. "Nontraditional Family-Related Attitudes in Japan: Macro and Micro Determinants," Population and Development Review, The Population Council, Inc., vol. 40(2), pages 241-271, June.
    5. Oshio, Takashi & 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.
    6. 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.
    7. Nakajima, Ryo & Tanaka, Ryuichi, 2014. "Estimating the effects of pronatal policies on residential choice and fertility," Journal of the Japanese and International Economies, Elsevier, vol. 34(C), pages 179-200.
    8. Shingo Takahashi & Masumi Kawade & Ryuta Ray Kato, 2009. "Spousal Tax Deduction, Social Security System and the Labor Supply of Japanese Married Women," Working Papers EMS_2009_16, Research Institute, International University of Japan.
    9. 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.
    10. YOKOYAMA, Izumi, 2015. "The Impact of Tax Reform in Japan on the Work-Hour and Income Distributions of Married Women," Discussion Papers 2015-02, Graduate School of Economics, Hitotsubashi University.
    11. Yamada, Ken, 2011. "Labor supply responses to the 1990s Japanese tax reforms," Labour Economics, Elsevier, vol. 18(4), pages 539-546, August.
    12. 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.
    13. 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.
    14. ZHAO Meng (KONISHI Moe), 2017. "Health-Related Income Gaps and the Effectiveness of Redistributive Policies in Japan," Discussion papers 17039, Research Institute of Economy, Trade and Industry (RIETI).
    15. Yamamura, Eiji, 2009. "Socio-economic status, gender, and spouse’s earnings: affect of family background on matching," MPRA Paper 17100, University Library of Munich, Germany.
    16. Kozo Kiyota & Sawako Maruyama, 2017. "On the Demand for Female Workers in Japan: The Role of ICT and Offshoring," Keio-IES Discussion Paper Series 2017-027, Institute for Economics Studies, Keio University.
    17. 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.

    More about this item

    Keywords

    Female labor supply; Income tax; Spousal deduction; Intrahousehold allocation; D12; H31; J22;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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