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Effect of Rising Welfare Benefits on the Employment Income: Evidence from single mothers in Japan

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  • Kodai MATSUMOTO

Abstract

This study empirically examines the effect of increased welfare benefits on the earned income of single-mother households. Japan’s public assistance system reduces the amount of assistance provided to recipients as their household income rises, which disincentivizes individuals from seeking employment. Concerns about the impoverishment of single-mother households have necessitated an investigation into how changes in welfare benefits affect the labor market behavior of single-mother households. This study utilizes microdata containing information on all members of households receiving public assistance benefits. The analysis focuses on the October 2018 revision of public assistance standards, and leverages regional variations in the increase in public assistance benefits for single-mother households. The results reveal that for single mothers with children in junior high or high school, an increase in public assistance benefits significantly reduces earned income, particularly when the analysis is limited to women in good health condition. However, most cases reveal no such statistically significant effect. Given the increasing concern over poverty among single-mother households, understanding whether higher welfare benefits discourage employment is crucial for designing effective policies.

Suggested Citation

  • Kodai MATSUMOTO, 2025. "Effect of Rising Welfare Benefits on the Employment Income: Evidence from single mothers in Japan," Discussion papers 25014, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:25014
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    References listed on IDEAS

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    1. Matsumoto, Kodai, 2022. "The effects of employment support programs on public assistance recipients: The case of a Japanese municipality program," Journal of the Japanese and International Economies, Elsevier, vol. 63(C).
    2. Naoi, Michio & Akabayashi, Hideo & Nakamura, Ryosuke & Nozaki, Kayo & Sano, Shinpei & Senoh, Wataru & Shikishima, Chizuru, 2021. "Causal effects of family income on educational investment and child outcomes: Evidence from a policy reform in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 60(C).
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    4. Bargain, Olivier & Doorley, Karina, 2011. "Caught in the trap? Welfare's disincentive and the labor supply of single men," Journal of Public Economics, Elsevier, vol. 95(9-10), pages 1096-1110, October.
    5. Asakawa, Shinsuke & Sasaki, Masaru, 2022. "Can child benefit reductions increase maternal employment? Evidence from Japan," Journal of the Japanese and International Economies, Elsevier, vol. 66(C).
    6. Lemieux, Thomas & Milligan, Kevin, 2008. "Incentive effects of social assistance: A regression discontinuity approach," Journal of Econometrics, Elsevier, vol. 142(2), pages 807-828, February.
    7. Moffitt, Robert A., 2002. "Welfare programs and labor supply," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 34, pages 2393-2430, Elsevier.
    8. Christian Dustmann & Rasmus Landersø & Lars Højsgaard Andersen, 2024. "Refugee Benefit Cuts," American Economic Journal: Economic Policy, American Economic Association, vol. 16(2), pages 406-441, May.
    9. Takashi Oshio & Shinpei Sano & Miki Kobayashi, 2010. "Child Poverty as a Determinant of Life Outcomes: Evidence from Nationwide Surveys in Japan," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 99(1), pages 81-99, October.
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