A Dynamic Decision Model of Marriage, Childbearing, and Labor Force Participation of Women in Japan

This paper empirically examines the life-time joint decision problem of marriage, childbearing, and labor force participation for women in Japan, motivated by the recent decrease in the number of marriages and the total fertility rate. Using the 1993-95 Japanese Panel Surveys of Consumption, the structural estimation result of a dynamic decision model suggests that women benefit from labor force participation, and that this gain exceed financial benefits from earnings. However, the probability of finding full-time work within a year for housewives or part-time workers is estimated as less than 20%, and is even lower for less-educated women. As regards family formation, utility gains and losses from the first child are insignificant or rather negative, those from the second child are significantly positive, those from the third or subsequent child are generally insignificant. Utility gains and losses from marriage are significantly negative if one leaves out financial advantages gained from the husband's earnings. The estimation using a recent sample suggests that the sum of the estimated values of marriage and two children as a typical family unit is negative for women in the labor force.