The labor supply of married women and spousal tax deductions in Japan—a structural estimation

The Japanese tax system offers an opportunity to investigate the labor supply response of married women to the income tax and the intrahousehold resource allocation mechanism, since the deductible amount from the husband’s income decreases as the wife’s earnings increase. Using cross-section data, I structurally estimate the labor supply of married women under the piece-wise linear budget constraint created by the Japanese tax and social security system. I find that the wife’s labor supply response to her husband’s decreasing deduction tends to be greater than the response to her own income tax. This suggests that not only the unitary model is rejected but also that female labor is allocated inefficiently within a family. Finally, this study shows that the choice of household model affects the predicted effect of policy reform and that the currently proposed reforms will have less of an effect on the labor supply of married women than previous studies claim.

The Demand for Labor: An Analysis Using Matched Employer–Employee Data from the German LIAB. Will the High Unskilled Worker Own-Wage Elasticity Please Stand Up?

This paper uses matched employee–employer LIAB data to provide panel estimates of the structure of labor demand in western Germany, 1993–2002, distinguishing between highly skilled, skilled, and unskilled labor and between the manufacturing and service sectors. Reflecting current preoccupations, our demand analysis seeks also to accommodate the impact of technology and trade in addition to wages. The bottom-line interests are to provide elasticities of the demand for unskilled (and other) labor that should assist in short-run policy design and to identify the extent of skill biases or otherwise in trade and technology.

The Non-Existence of the Labor Demand/Supply Diagram,and other Theorems of Institutional Economics

The most famous and influential diagram in modern (neoclassical) labor economics is the model of wage determination by supply and demand. Using concepts and ideas from institutional economics, I argue that the theory of a perfectly competitive labor market is logically contradictory and, hence, the demand/supply diagram cannot exist on the plane of pure theory. Four other fundamental theorems concerning labor markets are also derived, as are implications about the theoretical foundation of the field of industrial relations and the economic evaluation of labor and employment policy.

Marriage market imbalances and labor force participation of Canadian women

Several studies find a negative correlation between the ratio of males to females and measures of female labor supply in the US. This negative correlation has been interpreted as empirical support for the hypothesis that marriage market conditions influence intra-household allocation decisions. Given the similarity of cultures and of labor supply behavior of women in Canada and the United States, and the fact that they both experienced baby-booms at roughly the same time, any explanation for changes in female labor supply would be expected to hold for both countries. We test the prediction that marriage market conditions have explanatory power for Canadian female labor force participation (LFP) rates over the period 1971–2001. We find smaller marriage market effects for Canada than those found for the US but similar in magnitude to those found for the US Midwest.

The Philanthropic Poor: In Search of Explanations for the Relative Generosity of Lower Income Households

In this study we investigate the relationship between income and charitable giving. Previous research shows inconsistent findings regarding both the effect of income on the probability of giving and the proportion of income spent on charitable giving. We test hypotheses with the Giving in The Netherlands Panel Study 2003 (N = 1,316). We do not find an effect of income on the probability of giving, but a consistent negative effect of income on both total and religious donations as a proportion of income. This effect cannot be explained by stronger religious affiliation of lower income groups, or by other differences such as age, and price of giving. We find evidence in favor of a giving standard: Norms concerning the level of donations in specific situations that people in different income groups share, leading lower income groups to donate a higher proportion of their income.

Different Paths to Similar Outcomes? Industrial Relations Reform and Public Policy in Australia and New Zealand

In recent years, both Australia and New Zealand have embarked on significant labor market reforms which have resulted in more decentralized and individualized systems of industrial relations. Although both countries share a common heritage of state-sponsored conciliation and arbitration, which fostered a centralized approach to labor market regulation, each has responded in its own way to economic and political pressures to reform its long-established industrial relations system. Despite differences in the process of indusrial relations reform, both countries now have industrial relations systems which are more individualistic and in which unions play a less significant role than in the past.

Recent Evidence on Factors Influencing the Female Labor Force Participation Rate

This study seeks, using state-level data, to identify key factors that help to explain recent trends of labor force participation among women. Adult females are treated as attempting to maximize utility subject to a variety of budgetary and non-budgetary constraints. Among the findings obtained is a positive impact from the level of public assistance, i.e., the greater the extent of public assistance to adult females in the forms of Supplemental Security Income, Food Stamps, and so forth, the higher the female labor force participation rate (FLFPR). Other factors contributing to observed FLFPRs include age, the presence of young children, family income, educational attainment and disability status. In addition, we also find evidence that an increase in the proportion of the population that is non-native to the U.S. has a negative effect on the FLFPR.

Return to Education and the Changing Role of Credentials in the Croatian Labor Market

The countries of Central and Eastern Europe experienced a rapid increase of return to education with the advent of the transition. We look at the dynamics of wage premiums in Croatia and estimate how much the return to education has changed between 1996 and 2004 on the basis of labor force survey data. We also extend the paper in order to address additional features of the wage structure, such as non-linearities in the return to education associated with attainment of credentials. We find that contrary to most transition countries, premiums for education in Croatia began to grow only after the mid 1990s. However, by 2004, they reached the levels of premiums found in other transition countries and advanced market economies, thus creating market incentives for investment in education. We also find that major part of this higher rate of return came through higher return to credentials.

Educational Attainment and the Lesbian Wage Premium

This paper provides insight into the wage gap between lesbians and heterosexual women. Using data from the 2000 Decennial Census, we find a lesbian premium that equals approximately 10% for women without a bachelor’s degree, and is nearly non-existent for women with higher levels of education. These findings are consistent with proposition that the gap between lesbians’ and heterosexual women’s commitment to the labor market narrows at higher levels of education. We also find that controls for industry and occupation exert only a small effect on the gap between lesbian and heterosexual women’s wages.

On the influence of extreme parties in electoral competition with policy-motivated candidates

We study and compare equilibrium platforms in models of unidimensional electoral competition with two and four policy motivated parties. We first analyze the plurality game, where the party getting the most votes is elected and implements its proposed platform. Restrictions on the set of credible announcements are needed to get existence of equilibria. Comparing equilibria with two and four parties, we obtain that moderate parties react to the introduction of extreme parties by proposing the same or more extreme equilibrium platforms. We then study the proportional system, where the policy implemented is a weighted sum of the proposals, with the voting shares as weights. Here, the existence of extreme parties leads moderate ones to choose more centrist platforms. We finally test the robustness of our results with respect to, first, the enlargement of the strategy space to entry decisions and, second, to asymmetric distributions of voters' blisspoints.

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Home Ownership, Social Insurance, and the Welfare State

Home ownership has potentially significant consequences for welfare state policy. High owner-occupancy rates may function as private insurance where social spending is low (a substitution effect). Alternatively, state income redistribution policies could raise the number of home owners (an income effect). Cross-national time-series data show that social spending is negatively related to home ownership, and mediates the positive relationship between income inequality and owner-occupancy rates. This suggests that owner-occupancy acts as a form of social insurance over the life course. Future welfare state researchers should consider the issue of home ownership in analyses of inequality and the social safety net.

The economics of gay and lesbian couples: Introduction to a special issue on gay and lesbian households

This article presents a simple conceptual framework integrating three couple-related outcomes analyzed in this volume: wage differentials in earnings related to couple formation, household formation (including cohabitation and registration as Registered Domestic Partnership), and intra-household allocation of income. It also discusses some of the articles’ main findings.

Testing Fair Wage Theory

Fairness considerations often are invoked to explain wage differences that appear unrelated to worker characteristics or job conditions, but non-experimental tests of fair wage models are rare because market data rarely permit researchers to measure individual workers’ productivity and its value. We use data from the baseball labor market to address this problem, and find no support for fair wage theory. We do find, however, that fairness premia can be illusory: Wages appear to incorporate fairness premia in regressions that control for variation in individuals’ physical output, but such premia evaporate when the value of that output is held constant.

Divergence Period in the European Convergence Process

This paper presents the analysis of sigma (σ) and unconditional beta (β) convergences of per capita GDP among the ten European countries which accessed the European Union in 2004. Our results confirm the existence of both types of convergence in the second half of the 1990s and the 2000s, whereas in the first half of the 1990s, the countries rather diverged or at least did not converge. Generally, the poorer and new EU member states grew faster than the richer new EU member states. As a result, the income gap between these countries has decreased although it still remains quite large. The convergence occurred at the rate of 2.87% during the years 1995–2006 and 3.23% during 1996–2006.

Is Work-Family Policy Use Related to the Gendered Division of Housework?

Researchers have proposed that work-family policy use may either reinforce or challenge the existing gendered division of labor within couples, but results from prior studies have been inconclusive. Using data from a regional survey of work and family life, we extend this research by focusing on how housework is divided within couples and by differentiating between traditionally female- and male- typed housework tasks. Results show that among dual-earning women, policy use is not related to share of female- or male-typed tasks. Among dual-earning men, policy use is positively related to share of female-typed tasks and negatively related to share of male-typed tasks. These findings suggest that work-family policy use does not reinforce the gendered division of housework.

The distribution of financial well-being and income within the household

In this paper we consider the issue of the intra-household distribution of welfare directly using a survey measure of self-perceived economic well-being. We develop a theoretical model of satisfaction within the household for couples. In the empirical analysis we find that husbands and wives often report different levels of financial satisfaction. The most important correlate of relative satisfaction within the household is found to be relative income. This is a direct confirmation of the previously implicit findings and is predicted by our theoretical model.

An Economic Analysis of the Gap Between Desired and Actual Fertility: The Case of Spain

Family size is the outcome of sequential decisions influenced both by preferences and by ongoing changes in the environment where a family lives. During the last two decades, the gap between the number of children women prefer and their actual fertility has widened in Spain. The paper uses the 1985 and 1999 Spanish Fertility Surveys to study whether the tightening of the labor market and worsening of economic conditions in Spain during the last 20 years are important determinants of this change. I find that women facing high unemployment rates in their mid-twenties tend to restrict their fertility below their ideal level. Among women in the labor force, the stability of a public sector job lessens the difficulties of balancing employment and family and of achieving preferred fertility. Temporary contracts work in the opposite direction. Findings are robust to the inclusion of controls for within-couple discrepancies in either preferences or religious affiliation.

Labor Supply Decisions of Disabled Male Workers

We use unique survey data, collected by the Workers’ Compensation Board of Ontario, to estimate the labor supply response of disabled male workers to benefit payouts and their post-injury wage. Our data enable us to fill gaps in the existing literature by estimating the hours as well as the return-to-work response for younger as well as older workers, based on objective rather than subjective self-reporting of disability status. Our results suggest a strong positive incentive effect from higher wages a and that lump-sum benefit payouts that are not reduced if earnings increased generally do not have adverse incentives on the return-to-work and hours decision, except for an income effect over the longer life cycle of younger men. We also discuss the policy implications of our estimates.

Affirmative Action Can Increase Effort

Previous theoretical work examining labor tournaments concluded that an affirmative action program will always reduce the effort supplied by agents, thereby reducing output and profit for the tournament administrator; however, experimental results sometime contradict this conclusion. In the context of a labor tournament I demonstrate that there exists an affirmative action program that induces both types of agents to provide greater effort. In some instances the effort maximizing affirmative action program will also give both types of agents an equal chance of winning the tournament.

Married Women’s Labor Supply and Spousal Health Insurance Coverage in the United States: Results from Panel Data

This paper investigates the effect of spousal insurance coverage on married women’s labor supply. This effect was hypothesized to be negative, since married women have an incentive to seek employment in jobs that will provide insurance when their husbands do not provide coverage. Panel data from the 1996–2004 Medical Expenditure Panel Surveys was used to control for the potential correlation between unobserved characteristics and spousal insurance. The findings suggest that spousal coverage does have a negative effect on married women’s labor supply, and that most of the reduction in labor supply seems to derive from shifts out of the labor force rather than between part-time and full-time work.