THE EFFECTS OF THE 1.03 MILLION YEN CEILING IN A DYNAMIC LABOR SUPPLY MODEL |
| |
| Authors: | YUKIKO ABE |
| |
| Institution: | Abe:;Associate Professor, Graduate School of Economics and Business Administration, Hokkaido University, Kita 9 Nishi 7, Kita-ku, Sapporo 060-0809, Japan. Phone +81-11-706-3860, Fax +81-11-706-4947, E-mail |
| |
| Abstract: | In this paper I examine the effects of a means-tested transfer system in Japan ("1.03 million yen ceiling") in a dynamic labor supply model with endogenous retirement. In Japan, married women have reason to limit their annual earnings to no more than 1.03 million yen in order to receive a number of benefits available to low-income wives, and in fact often choose to do so. In a dynamic model, the optimal labor supply schedule follows a pattern that is not seen in a static framework, which I call the "spillover effect." The paper also examines the properties of dynamic welfare cost of this ceiling. ( JEL J22, H24, H55) |
| |
| Keywords: | |
|
|
