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Labor Supply of Japanese Married Women: Sensitivity Analysis and a New Estimate



We conduct a comprehensive analysis of the existing literature on the labor supply of Japanese married women using the Japanese Panel Survey of Consumers. We first conduct a detailed sensitivity analysis of the estimates of the wage elasticity to various economic and statistical assumptions used in the past studies. We then provide a new estimate of the labor supply model that simultaneously controls for wage endogeneity, sample selection into labor force as well as the possibly endogenous selection between different segments of the non-linear and often discontinuous budget constraint in a joint maximum likelihood estimation. We reject the assumption of wage exogeneity. The wife's labor market experience appears to be a valid excluded instrument, which validates most of the model specifications in the prior literature. The assumption of no-sample selection bias is rejected. Our new estimate shows that there are notable differences in the labor supply behavior of women who choose different segments of the budget constraint. In particular, the wage elasticity of women who work within the 1.03 million yen ceiling is twice more negative (-1.28) than that of women whose income exceeds the 1.41 million yen ceiling (-0.60). The wage elasticity smaller than -1 for the former type of women suggests that they may be adjusting their hours of work so as to contain their income within the 1.03 million yen ceiling.

Suggested Citation

  • Shingo Takahashi & Masumi Kawade & Ryuta Ray Kato, 2009. "Labor Supply of Japanese Married Women: Sensitivity Analysis and a New Estimate," Working Papers EMS_2009_14, Research Institute, International University of Japan.
  • Handle: RePEc:iuj:wpaper:ems_2009_14

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    References listed on IDEAS

    1. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-625, April.
    2. Takahiro Akita, 2002. "Regional Income Inequality In Indonesia And The Initial Impact Of The Economic Crisis," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 38(2), pages 201-222.
    3. Hal Hill & Budy Resosudarmo & Yogi Vidyattama, 2008. "Indonesia'S Changing Economic Geography," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 44(3), pages 407-435.
    4. Jorge Garcia Garcia & Lana Soelistianingsih, 1998. "Why Do Differences in Provincial Incomes Persist in Indonesia?," Bulletin of Indonesian Economic Studies, Taylor & Francis Journals, vol. 34(1), pages 95-120.
    5. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
    6. Sergio J. Rey & Mark V. Janikas, 2005. "Regional convergence, inequality, and space," Journal of Economic Geography, Oxford University Press, vol. 5(2), pages 155-176, April.
    7. Stephane Mussard, 2004. "The bidimensional decomposition of the Gini ratio. A case study: Italy," Applied Economics Letters, Taylor & Francis Journals, vol. 11(8), pages 503-505.
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    Cited by:

    1. 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.

    More about this item


    Female labor supply; Spousal deduction; Social Security System; Non-linear budget constraint;

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies


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