A Structural Estimation of the Effects of Spousal Tax Deduction and Social Security Systems on the Labor Supply of Japanese Married Women

概要

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Japanese spousal tax deduction and social security systems cause a non-convexpiece-wise budget constraint for married women. Using a pooled sample from theJapanese Panel Survey of Consumers, we structurally estimated a labor supply modelthat explicitly takes into account the nonlinearity in the budget constraint. Our results suggest that the effects of spousal deduction and social security reforms on the labor supply of Japanese married women would be much smaller than what the pastreduced form studies suggest. The reform to completely eliminate the spousal taxdeduction would increase the population labor supply only by 0.7%, though the laborsupply responses of the most affected workers would be nontrivial, with their desired hours worked increasing by as much as 4%. The policy reform to require all women to pay the social security premium regardless of their income level would havealmost no effects on the population labor supply. Our results also suggest thatlump-sum income transfer programs, such as the current child care support program,would have negligible effects on female labor supply unless the transfers aresubstantially large.