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

概要

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We conduct a comprehensive analysis of the existing literature on the labor supply ofJapanese 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 ofwomen who choose different segments of the budget constraint. In particular, thewage elasticity of women who work within the 1.03 million yen ceiling is twice morenegative (-1.28) than that of women whose income exceeds the 1.41 million yenceiling (-0.60). The wage elasticity smaller than -1 for the former type of womensuggests that they may be adjusting their hours of work so as to contain their incomewithin the 1.03 million yen ceiling.