Intensive margins, extensive margins, and spousal allowances in the Japanese system of personal income taxes: A discrete choice analysis

Shun ichiro Bessho, Masayoshi Hayashi

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

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.

Original languageEnglish
Pages (from-to)162-178
Number of pages17
JournalJournal of the Japanese and International Economies
Volume34
DOIs
Publication statusPublished - 2014

Fingerprint

income tax
wife
working hours
labor supply
Japanese studies
simulation
labor market
participation
costs
Working hours
Extensive margin
Discrete choice analysis
Personal income tax
Intensive margin
Labor supply
Fixed costs
Labour market participation
Simulation
Microsimulation
Household

Keywords

  • Discrete choice model
  • Female labor supply
  • Japan
  • Tax reform

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance
  • Political Science and International Relations

Cite this

Intensive margins, extensive margins, and spousal allowances in the Japanese system of personal income taxes : A discrete choice analysis. / Bessho, Shun ichiro; Hayashi, Masayoshi.

In: Journal of the Japanese and International Economies, Vol. 34, 2014, p. 162-178.

Research output: Contribution to journalArticle

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