Empirical analysis of the effects of increasing wage inequalities on marriage behaviors in Japan

Abstract

This study examines the effects of inequalities in the lower, rather than the upper, tail of wage distribution due to a declining labor market on marriage behaviors based on gender in Japan. I apply a median-preserving spread to a marriage search model and then empirically analyze the theoretical hypothesis for cross-gender marriage behaviors using extensive individual Japanese data from the Employment Status Survey. The theoretical and empirical results show that both genders’ wage inequalities in the lower tail have positive and statistically significant effects on increasing the probability of unmarried people across both genders. Female wage inequality in the upper tail also has a significant positive effect on the probability of unmarried men. On the other hand, an increase in male unemployment rates have positive and significant effects on the probability of unmarried women, even after controlling with wage inequality indices. In addition, the median wage for women has a significant and negative effect on the probability of unmarried men. These results highlight the policies to increase wages in the lower income class for both genders and to address unemployment for men in order to raise marriage rates.