Economic Analysis Series No.205THE ECONOMIC ANALYSIS

Changes in household structure and weakening of mutual assistance by families: Progress of unmarried, postponement of marriage, assortative mating and income inequality

By Naomi KODAMA

In Japan, the equivalent income gap is widening due to changes in household structure. On one hand, the rapid decline in the number of three-generation households living together and the increasing longevity leads to the increase in the number of single-person households among elderly households, as a result, the equivalent income disparity is widening. On the other hand, even in the working generation, the income inequality in households is widening due to the rise in the late marriage and non-marriage, particularly among low-income men, as well as the increase in assortative mating like power couples and weak couples. Our results show that marriage, which once functioned as an equalization device, now has the opposite function of widening inequality. The increase in single-person households and assortative mating no longer fail to expect mutual assistance from families, even in working-age households and in elderly households.

JEL Classification Codes: I24, J11, J12
Keywords: Income inequality, Assortative mating, Marriage behavior

The Influence of Household Members’ Employment on Household Consumption - An Econometric Analysis Based on Japanese Official Microdata

By Shinsuke ITO and Takahisa DEJIMA

This paper empirically analyses the relationship between employment type of the head and spouse of head of household and household consumption expenditure using individual data from the National Survey of Family Income and Expenditure and Basic Survey on Wage Structure, and referencing previous research on the influence of individual household members on household consumption decisions. We first create a detailed subdivision of employment type of the spouse of the head of household, and use this framework to examine the influence of earned income of head and spouse of head of household as well as the difference between observed value and expected value of earned income on household consumption expenditure.

The results of this analysis shows that differences in employment type of the spouse of head of household influence household consumption expenditures including expenditures for food and education. For food expenditure, controlled by household attributes such as age of the youngest child and household assets, a higher earned income of the spouse tends to significantly reduce the ratio of food to overall consumption expenditure.

This analysis also establishes that expenditures such as for food, education and leisure increase significantly if the expected value of earned income subtracted from the observed value of earned income is positive (i.e. actual income is higher than expected income). It is interesting to note that this value differs depending on the employment type of the spouse of the head of household.

JEL Classification Codes: D12, D13, E21
Keywords: household type, employment type, household consumption expenditure

Changing Household Consumption in the Transforming Japanese Society:An Analysis in View of In-kind Benefits and Time Use

By Rieko NAGAMACHI, Saeko MAEDA and Masaaki KAWAGOE

This study tries to draw a comprehensive picture of household behaviors, ensuring consistency with the macroeconomy in the Systems of National Accounts. We estimate "full consumption" as a sum of consumption expenditures, in-kind benefits, and values of unpaid work, and analyze household data from 1994 to 2014 by household head age group and by household type. As a result, we detect a shift in demand from consumption expenditure to the other two in almost all kinds of households. It is noteworthy that a great divergence between consumption expenditures and full consumption in several kinds of households indicates a risk of misjudgment of households’ living conditions based only on developments of consumption expenditures. We also observe that in-kind benefits such as nursing care and childcare increased on one hand, and that their related domestic work increased rather than decreased on the other, thereby failing to confirm substitution between them.

JEL Classification Codes: D13, E21, J22
Keywords: household consumption, in-kind benefits, unpaid work

Examining Local Government Spending on Silver Democracy

By Hiroaki IRIE

This study examines the impact of the so-called silver democracy, which we define as the local governments’ tendency to spend mostly on the elderly as the median age of voters increases. We use the Almost Ideal Demand System (AIDS) to analyze the impact of median voter age and voter turnout on local governments’ spending, taking into account typical factors that generally affect spending, such as population structure, area, and fiscal conditions. With AIDS, the estimation considers the interrelationships among multiple expenditures.

Our estimation results show that the median age of voters as a parameter is the most significant positive for welfare spending on the elderly and negative for child welfare and education spending. In the model that includes voter turnout, the parameter for voter turnout is positive for child welfare and education spending but negative for welfare spending on the elderly. These results suggest the existence of a silver democracy, as spending on the elderly takes precedence over spending on younger generations.

JEL Classification Codes: H72, H75, R50
Keywords: Silver Democracy, Local Government Spending, QUAIDS

Household Income Dynamics and Government Income Adjustments in Japan 2010-2019

By Masumi KAWADE

This paper analyses the monetary exchanges between households and the government regarding public burdens, such as income tax and social security payments, and public transfers, such as public assistance, with the Japan Household Panel Survey (JHPS). We construct the 10-year continuous datasets of 1465 households, by using JHPS from 2010 to 2020, and apply actual public burden schedules and public transfer schemes in Japan. And we evaluate the monetary exchanges between households and the government in terms of income classes and each household's characteristics.

The income dynamics of each household indicate that both ends of total equivalent income classes tend to experience a bigger income change than the other income classes. We conduct the micro-simulation to compare the long-term redistributive effects of public burdens schedules and public transfer schemes in 2010 and 2019. The increased proportion of net public burden in 2019 is heavier for low-income households than for high-income ones, although all households face a heavier public burden in 2019 relative to 2010. And we find that the built-in-stabilizer effect of the monetary exchanges weakened in 2019 because the covariance coefficients of equivalent disposable income of households increased in 2019's schemes.

JEL Classification Codes: H24, D31, C23
Keywords: Income Redistribution, Income Dynamics of Households, Micro-simulation Analysis

Re-examination of Generational Accounting in Japan: A Perspective of Lifetime Consumption Inequality among Generations

By Saeko MAEDA, Tomohiro YAMAZAKI and Masaaki KAWAGOE

This study reexamines the results of generational accounting, which shows that net benefits of social security become more negative in later generations, impairing intergenerational equity. Under certain economic assumptions, we calculate present discounted values of final consumption expenditure and actual final consumption including benefits in kind such as education, medical and long-term care, for three generations born in 1950, 1980, and 2010.

The results, unlike those of generational accounting, show that the later generations are expected to enjoy a higher lifetime consumption level than the generation born in 1950. In addition, consumption levels of the two later generations may not differ significantly, depending largely on various assumptions, especially on the future macroeconomic environment. These results urge us to reconsider the concept of intergenerational inequality.

JEL Classification Codes: D63, E21, J11
Keywords: intergenerational inequality, generational accounting, actual final consumption.

(Submitted Article)
Multiple Job Holding: A Panel Investigation of the Effects on Turnover and Wages in Japan

By Fang HE

This study examines the effects of multiple job holding by regular employees on their primary jobs’ turnover and wage rate, using the Japan Household Panel Survey (2005-2018). To verify the potential differences caused by individual heterogeneity, in addition to the total sample, regressions were also conducted using samples of individuals working at an enterprise that allows multiple job holding, individuals wishing to change their jobs, individuals wishing to have multiple jobs, and individuals who want continue at their current jobs. The results were subsequently compared.

The estimation results show that, for male regular employees wishing to change their jobs, multiple job holding will raise the probability of job turnover, which might have positive effects on enhancing labor market fluidity and raising the quality of matching between workers and jobs. Moreover, multiple job holding raises the afterward wage rate through job turnover for both male and female regular employees, which suggests that it might also positively affect human capital accumulation and productivity.

JEL Classification Codes: J24, J63, J31
Keywords: Multiple Job Holding, Turnover, Wage