Abstract
There have been warnings in recent years that the decrease in labor supply resulting from the declining birth rate could lead to an economic downturn. A contraction in labor supply leads to a reduction in salary income and affects tax revenues. Thus, as part of a growth strategy, attention is focused on promoting the activities of married women as a potential labor force. Further, there are active discussions on the supply of married women as labor, and the approach to take for spousal deductions and dependent deductions.
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- 1.
According to the Ministry of Internal Affairs and Communications, “2009 Labor Force Survey,” the group aged 15 to 24 years made up 9.8%, 25 to 29 years formed 14.8%, and 30 to 34 years accounted for 24.2%.
- 2.
In 1970, the average life expectancy of women was 74.66 years old; this had risen to 86.83 years old in 2014, and changes to women’s lifecycle during this period were observed. The rate of participation of women in the labor force rose from 45.5% (1970) to 80.3% (2015). However, Women’s labor market opportunities and choices are often intertwined with marriage and children. Particularly in Japan, earlier cohorts of women typically left the labor force during their 20s and 30s, re-entering only after their children had grown older.The lifecycle profile for female shows an M-shaped curve, which indicates that many women leave the labor force when they marry or give birth to children; they tend to return to work after their children have grown. The M-shaped curve has become flatter in recent years. Alongside the postponement of marriage, the average age at the time of first marriage increased from 24.2 years old (1970) to 29.4 years old(2014), and similarly, alongside the postponement of giving birth, the average age of the mother at the time of the birth of the first child rose from 25.6 years (1970) to 30.6 years (2014). The total fertility rate in 1970 was 2.13 children, but by 2014 this had fallen to 1.42 children.
- 3.
According to the Ministry of Internal Affairs and Communications’ (2014) “Labor Force Survey: Basic Totals,” women’s participation in the labor force by age group started to depict a clear M-shaped curve from around 1950. The rate in 1920 for women aged from 15 years to 19 years was 68.4%, but this participation declined as they became older, and a mountain shape could be seen for young people in 1950 and an M-shaped curve could be recognized due to the decline in the rate of participation in the labor force of women aged in their thirties by 1970. The bottom part of the M-shaped curve, of women aged 25 years to 35 years, was 42.6% in 1975, but by 2011 it had risen to 77.2%.
- 4.
In its “10th Longitudinal Survey of Adults in the 21st Century,” the Ministry of Health, Labour and Welfare found that after marriage, regular employment was 43.6%, while non-regular employment such as part-time employment, which before marriage was at 29.2%, decreased to 20.4%. The employment rate dropped further due to childcare, and on the birth of the first child, the number of regular employees declined to 19.8% and that of non-regular employees to 9.4%.
- 5.
In terms of the reasons given by married women for selecting part-time labor, the most selected answer, at 49.3%, was “If I exceed the fixed amount (1.3 million yen), and as the spouse if I am excluded from the dependent health insurance coverage, welfare pension, etc., I will have to subscribe myself”.
- 6.
The problem of double deduction exists in the spousal deduction system. If the spouse is a non-regular employee, not only is the basic deduction applied to the spouse’s income, but they can also receive spousal deduction applied additionally to the basic deduction of the head of the household. Further, the total deduction amount in such cases is greater than for households with full-time homemakers or dual-income households, and this problem of double deduction has been noted.
- 7.
Pioneering research that has approached the theme of spousal employment behavior in terms of its effects on wages and income includes the studies by Rosen and Welch (1971), Gunderson (1977), and Keeley et al. (1978). Previously, continuous variables were adopted for labor supply, but Gunderson (1977) and Keeley et al. (1978) explained that employment selection is made based on a certain level of designated working hours. Further, they showed that for spousal employment, selections are discontinuous selections of employment and non-employment. Gronau (1973, 1977) and Heckman (1974) evaluate behavior patterns from individual units to households according to lifecycle processes from employment, housework, and leisure perspective.
- 8.
Kawaguchi (2002) used data from the 1977 “Comprehensive Survey of Living Conditions” carried out by the Ministry of Health, Labour and Welfare, and obtained a significantly negative result for spousal employment rate relative to the husband’s income.
- 9.
Anonymous data are collected in such a way as to make it impossible to identify specific individuals, companies, or other groups in individual questionnaire data and households’ data (steps are taken to make the data anonymous). From the data on the subjects of the “National Survey of Family Income and Expenditure,” 80% re-extracted (re-sampling) households with 8 or more members were removed (removal of unusual records); in the event a person was aged 85 years or above, the notation was written as 85 years and above (top coating) and ages were expressed in 5-year groups; and the geographical divisions were limited to whether or not the household is in the three metropolitan areas (recoating).
- 10.
For persons with an income of less than 9 million yen, income is multiplied by 0.1, and for persons with an income of 9 million yen to less than 15 million yen, income is multiplied by 0.04 for an added amount of 540,000 yen, and an amount of more than 15 million yen becomes 1,140,000 yen.
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Adachi, Y. (2018). Effects of Spousal Deduction on Household Labor Supply. In: The Economics of Tax and Social Security in Japan. Springer, Singapore. https://doi.org/10.1007/978-981-10-7176-8_4
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DOI: https://doi.org/10.1007/978-981-10-7176-8_4
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