TY - JOUR
T1 - Intensive margins, extensive margins, and spousal allowances in the Japanese system of personal income taxes
T2 - A discrete choice analysis
AU - Bessho, Shun ichiro
AU - Hayashi, Masayoshi
N1 - Funding Information:
We are grateful to an anonymous reviewer for helpful comments and constructive suggestions. We would like to acknowledge the Research Centre for Information and Statistics of Social Science at the Institute of Economic Research, Hitotsubashi University for providing micro-level data from the Employment Status Survey for 1997. Bessho is supported by the Grant-in-Aid for Young Scientists (B-19730215) and financial assistance from the Seimei Foundation. Hayashi acknowledges support from the Nomura Foundation, the Seimei Foundation, and the Center for International Research on the Japanese Economy at the University of Tokyo.
PY - 2014/12
Y1 - 2014/12
N2 - 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.
AB - 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.
KW - Discrete choice model
KW - Female labor supply
KW - Japan
KW - Tax reform
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U2 - 10.1016/j.jjie.2014.06.001
DO - 10.1016/j.jjie.2014.06.001
M3 - Article
AN - SCOPUS:84904869775
SN - 0889-1583
VL - 34
SP - 162
EP - 178
JO - Journal of the Japanese and International Economies
JF - Journal of the Japanese and International Economies
ER -