Welfare Benefits and Labor Supply: Evidence from a natural experiment in Japan

Kazufumi Yugami, Atsushi Morimoto, Yoshiyuki Tanaka and Kodai Matsumoto

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: We use municipal amalgamations in Japan to identify the impact of welfare benefits on labor supply. In municipal amalgamations, under Japan’s Public Assistance (PA) program, municipalities with the highest class-areas become the new municipality and the basis for calculating welfare benefit levels. We use a difference-in-differences approach to identify the effect of the increase in PA benefits in Japan after municipal amalgamations on the labor supply. We found that an increase in PA benefit levels has little impact on the employment rate of prime-age populations but decreases that of bereaved or divorced women by 1.2% to 1.8%.

Pages: 32 pages
Date: 2017-08
New Economics Papers: this item is included in nep-pbe and nep-ure
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eti:dpaper:17109

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