Female Labor Supply in Japan: Implications of the Informal Sector for Labor Force Participation and Hours of Work

Abstract

This paper extends previous work on labor supply in Japan by treating the simultaneous labor force participation and hours of work decisions for Japanese wives, both employees and family workers. It estimates a trichotomous participation model for a sample from the Tokyo Metropolitan Area, and then estimates hours and wage equations, and aggregate labor supply elasticities. The empirical results generally confirm the economic model's theoretical predictions. Although the estimated aggregate wage and income elasticities for employees are somewhat higher than previous estimates for the U.S., they are of the same order of magnitude. However, the level of the husband's income has an unexpected positive effect on the annual hours that employees work and the elasticities estimated for family workers are usually large.