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Labor Supply Responses to the 1990s Japanese Tax Reforms

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  • Ken Yamada

    (Singapore Management University)

Abstract

The consumption-leisure choice model implies that an exogenous change in tax rates will bring about a change in labor supply. This implication is expected to be important to labor supplied by secondary earners under a progressive tax system when spousal income alters effective marginal tax rates. This paper examines labor supply responses to the income tax changes associated with Japanese tax reforms during the 1990s. Empirical specifications are presented in a way that is consistent with a life-cycle model of consumption and labor supply. A simple solution is applied to the sample-selection problem in panel data models with endogenous regressors. The results indicate that the hours-of-work elasticity with respect to the net-of-tax rate is 0.8 for married women.

Suggested Citation

  • Ken Yamada, 2009. "Labor Supply Responses to the 1990s Japanese Tax Reforms," Labor Economics Working Papers 23047, East Asian Bureau of Economic Research.
    • Handle: RePEc:eab:laborw:23047
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    Cited by:

    1. Saeed Solaymani, 2020. "Assessing the economic and social impacts of fiscal policies," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 47(3), pages 671-694, March.
    2. Jeremy Lise & Ken Yamada, 2019. "Household Sharing and Commitment: Evidence from Panel Data on Individual Expenditures and Time Use," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 86(5), pages 2184-2219.
    3. Amadeo Fuenmayor & Rafael Granell & Mauro Mediavilla, 2018. "The effects of separate taxation on labor participation of married couples. An empirical analysis using propensity score," Review of Economics of the Household, Springer, vol. 16(2), pages 541-561, June.
    4. Miyazaki, Takeshi & Ishida, Ryo, 2022. "Estimating the elasticity of taxable income: Evidence from top Japanese taxpayers," Japan and the World Economy, Elsevier, vol. 61(C).
    5. Hirokatsu Asano & Takahiro Ito & Daiji Kawaguchi, 2011. "Why Has the Fraction of Contingent Workers Increased? A Case Study of Japan," IDEC DP2 Series 1-3, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
    6. Hirokatsu Asano & Takahiro Ito & Daiji Kawaguchi, 2013. "Why Has the Fraction of Nonstandard Workers Increased? A Case Study of Japan," Scottish Journal of Political Economy, Scottish Economic Society, vol. 60(4), pages 360-389, September.
    7. Georg D. BLIND & Stefania LOTTANTI VON MANDACH, 2015. "Decades not Lost, but Won: Increased Employment, Higher Wages, and More Equal Opportunities in the Japanese Labour Market," Social Science Japan Journal, University of Tokyo and Oxford University Press, vol. 18(1), pages 63-88.
    8. KITAO Sagiri & MIKOSHIBA Minamo, 2022. "Why Women Work the Way They Do in Japan: Roles of Fiscal Policies," Discussion papers 22016, Research Institute of Economy, Trade and Industry (RIETI).
    9. Ken Yamada, 2008. "Estimating labour supply and time allocation by married Japanese men and unmarried Japanese women," Applied Economics Letters, Taylor & Francis Journals, vol. 15(9), pages 659-666.

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    More about this item

    Keywords

    Labor Supply Elasticity; Intertemporal Labor Supply Model; Sample-Selection Correction Model; Quasi-Experiment; Tax Reforms;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • C01 - Mathematical and Quantitative Methods - - General - - - Econometrics

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