IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this paper

Intensive Margins, Extensive Margins, and Spousal Allowances in the Japanes e System of Personal Income Taxes: A Discrete Choice Analysis

  • Shun-ichiro Bessho

    (Faculty of Economics, Keio University)

  • Masayoshi Hayashi

    (Faculty of Economics, The University of Tokyo)

   This study explores the effects of spousal allowances (SAs) in the Japanese system of personal income taxes, using the micro-simulation method based on the discrete choice model of labor supply. Our simulations show that the complete abolishment of SAs would increase the average annual working hours of all wives by 1.6% only, which is smaller than previous findings in the Japanese literature. If we focus on households benefiting from SAs, the rate of increase in the wife's working hours is even smaller (.1%). In addition, one particular case of SA reduction leads to a decrease in the labor supply of wives. We argue that these unexpected results are due to our explicit consideration of the fixed cost of labor market participations, which has been previously ignored in the Japanese studies.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.cirje.e.u-tokyo.ac.jp/research/dp/2013/2013cf912.pdf
Download Restriction: no

Paper provided by CIRJE, Faculty of Economics, University of Tokyo in its series CIRJE F-Series with number CIRJE-F-912.

as
in new window

Length: 34 pages
Date of creation: Dec 2013
Date of revision:
Handle: RePEc:tky:fseres:2013cf912
Contact details of provider: Postal:
Hongo 7-3-1, Bunkyo-ku, Tokyo 113-0033

Phone: +81-3-5841-5644
Fax: +81-3-5841-8294
Web page: http://www.cirje.e.u-tokyo.ac.jp/index.html
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Peter Haan, 2006. "Much ado about nothing: conditional logit vs. random coefficient models for estimating labour supply elasticities," Applied Economics Letters, Taylor & Francis Journals, vol. 13(4), pages 251-256.
  2. Olivier Bargain & Kristian Orsini & Andreas Peichl, 2012. "Comparing Labor Supply Elasticities in Europe and the US: New Results," SOEPpapers on Multidisciplinary Panel Data Research 525, DIW Berlin, The German Socio-Economic Panel (SOEP).
  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. Thomas F. Crossley & Sung-Hee Jeon, 2006. "Joint Taxation and the Labour Supply of Married Women: Evidence from the Canadian Tax Reform of 1988," Quantitative Studies in Economics and Population Research Reports 404, McMaster University.
  5. Apps,Patricia & Rees,Ray, 2009. "Public Economics and the Household," Cambridge Books, Cambridge University Press, number 9780521887878, November.
  6. John Creedy & Guyonne Kalb & Rosanna Scutella, 2003. "Discrete Hours Labour Supply Modelling: Specification, Estimation and Simulation," Melbourne Institute Working Paper Series wp2003n21, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  7. Abe, Yukiko, 2011. "The Equal Employment Opportunity Law and labor force behavior of women in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 25(1), pages 39-55, March.
  8. Olivier Bargain & Miriam Beblo & Denis Beninger & Richard Blundell & Raquel Carrasco & Maria-Concetta Chiuri & François Laisney & Valérie Lechene & Nicolas Moreau & Michal Myck & Javier Ruiz-Castillo , 2006. "Does the Representation of Household Behavior Matter for Welfare Analysis of Tax-benefit Policies? An Introduction," Review of Economics of the Household, Springer, vol. 4(2), pages 99-111, 06.
  9. Viktor Steiner & Katharina Wrohlich, 2004. "Household Taxation, Income Splitting and Labor Supply Incentives – A Microsimulation Study for Germany," CESifo Economic Studies, CESifo, vol. 50(3), pages 541-568.
  10. Alan Duncan & Mark N. Harris, 2001. "Simulating the Behavioural Effects of Welfare Reforms among Sole Parents in Australia," Melbourne Institute Working Paper Series wp2001n06, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
  11. Masayoshi Hayashi, 2009. "The Tax System and Labor Supply," Japanese Economy, M.E. Sharpe, Inc., vol. 36(1), pages 106-136, April.
  12. 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.
  13. 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, 04.
  14. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387, November.
  15. Vermeulen, F.M.P., 2006. "A collective model for female labour supply with nonparticipation and taxation," Other publications TiSEM 1cddc8dc-005a-42aa-af35-a, Tilburg University, School of Economics and Management.
  16. 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.
  17. Blomquist, N.S., 1992. "Estimation Methods for Male Labor Supply Functions: How to take Account to Taxes," Papers 1992-7, Uppsala - Working Paper Series.
  18. Bargain, Olivier & Orsini, Kristian, 2004. "In-Work Policies in Europe: Killing Two Birds with One Stone?," IZA Discussion Papers 1445, Institute for the Study of Labor (IZA).
  19. Melvin Stephens Jr. & Jennifer Ward-Batts, 2001. "The Impact of Separate Taxation on the Intra-Household Allocation of Assets: Evidence from the UK," NBER Working Papers 8380, National Bureau of Economic Research, Inc.
  20. Blomquist, Soren, 1995. "Restrictions in labor supply estimation: Is the MaCurdy critique correct?," Economics Letters, Elsevier, vol. 47(3-4), pages 229-235, March.
  21. Joris Ghysels & Josefine Vanhille & Gerlinde Verbist, 2011. "A care time benefit as a timely alternative for the non-working spouse compensation in the Belgian tax system," International Journal of Microsimulation, International Microsimulation Association, vol. 4(2), pages 57-72.
  22. Hausman, Jerry A, 1985. "The Econometrics of Nonlinear Budget Sets," Econometrica, Econometric Society, vol. 53(6), pages 1255-82, November.
  23. Bargain, Olivier & Orsini, Kristian & Peichl, Andreas, 2011. "Labor Supply Elasticities in Europe and the US," IZA Discussion Papers 5820, Institute for the Study of Labor (IZA).
  24. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "The labour market impact of the working families’ tax credit," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 75-103, March.
  25. Massimo Baldini & Daniele Pacifico, 2009. "The recent reforms of the Italian personal income tax: distributive and efficiency effects," Department of Economics 0611, University of Modena and Reggio E., Faculty of Economics "Marco Biagi".
  26. Ericson, Peter & Flood, Lennart, 1997. "A Monte Carlo Evaluation of Labor Supply Models," Empirical Economics, Springer, vol. 22(3), pages 431-60.
  27. Brewer, Mike & Duncan, Alan & Shephard, Andrew & Suarez, Maria Jose, 2006. "Did working families' tax credit work? The impact of in-work support on labour supply in Great Britain," Labour Economics, Elsevier, vol. 13(6), pages 699-720, December.
  28. repec:sen:rebelj:v:lv:y:2010:i:1:p:23-55 is not listed on IDEAS
  29. Lee, Grace H.Y. & Lee, Sing Ping, 2014. "Childcare availability, fertility and female labor force participation in Japan," Journal of the Japanese and International Economies, Elsevier, vol. 32(C), pages 71-85.
  30. Lennart Flood & Nizamul Islam, 2005. "A Monte Carlo evaluation of discrete choice labour supply models," Applied Economics Letters, Taylor & Francis Journals, vol. 12(5), pages 263-266.
  31. Bessho, Shun-ichiro & Hayashi, Masayoshi, 2005. "Economic studies of taxation in Japan: The case of personal income taxes," Journal of Asian Economics, Elsevier, vol. 16(6), pages 956-972, December.
  32. Kleven, Henrik Jacobsen & Kreiner, Claus Thustrup, 2006. "The marginal cost of public funds: Hours of work versus labor force participation," Journal of Public Economics, Elsevier, vol. 90(10-11), pages 1955-1973, November.
  33. repec:hoo:wpaper:e-90-11 is not listed on IDEAS
  34. Peichl, Andreas & Siegloch, Sebastian, 2010. "Accounting for Labor Demand Effects in Structural Labor Supply Models," IZA Discussion Papers 5350, Institute for the Study of Labor (IZA).
  35. Hausman, Jerry A., 1980. "The effect of wages, taxes, and fixed costs on women's labor force participation," Journal of Public Economics, Elsevier, vol. 14(2), pages 161-194, October.
  36. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695 Elsevier.
  37. Reto Nyffeler, 2005. "Different Modeling Strategies for Discrete Choice Models of Female Labour Supply: Estimates for Switzerland," Diskussionsschriften dp0508, Universitaet Bern, Departement Volkswirtschaft.
  38. Hausman, Jerry A., 1979. "The econometrics of labor supply on convex budget sets," Economics Letters, Elsevier, vol. 3(2), pages 171-174.
  39. Anna Brink & Katarina Nordblom & Roger Wahlberg, 2007. "Maximum fee versus child benefit: a welfare analysis of Swedish child-care fee reform," International Tax and Public Finance, Springer, vol. 14(4), pages 457-480, August.
  40. Richard Blundell & Alan Duncan & Julian McCrae & Costas Meghir, 2000. "Evaluating In-Work Benefit Reform: The Working Families Tax Credit in the U.K," JCPR Working Papers 160, Northwestern University/University of Chicago Joint Center for Poverty Research.
  41. Cogan, John F, 1981. "Fixed Costs and Labor Supply," Econometrica, Econometric Society, vol. 49(4), pages 945-63, June.
  42. John Dagsvik & Zhiyang Jia & Kristian Orsini & Guy Camp, 2011. "Subsidies on low-skilled workers’ social security contributions: the case of Belgium," Empirical Economics, Springer, vol. 40(3), pages 779-806, May.
  43. 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.
  44. Tim Callan & Arthur van Soest & John R. Walsh, 2009. "Tax Structure and Female Labour Supply: Evidence from Ireland," LABOUR, CEIS, vol. 23(1), pages 1-35, 03.
  45. Thomas MaCurdy & David Green & Harry Paarsch, 1990. "Assessing Empirical Approaches for Analyzing Taxes and Labor Supply," Journal of Human Resources, University of Wisconsin Press, vol. 25(3), pages 415-490.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:tky:fseres:2013cf912. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (CIRJE administrative office)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.