Decrease In Labor Supply Research Articles

The Effect of Inheritance Receipt on Labor Supply: A Longitudinal Study of Japanese Women

Abstract This study examines the effect of inheritance receipt on labor supply, exploring the empirical issues associated with inheritance expectations, informal caregiving, and liquidity constraints. The literature has not examined the possibility that ignoring the labor supply increase associated with the termination of caregiving can lead to an underestimation of the decrease in labor supply after inheritance. Based on a dataset of Japanese women, we found that inheritance decreased labor supply, primarily through changes in the extensive margin, particularly for recipients in their 50s and under 40 years of age with children. Unlike labor supply, household expenditures hardly change after an inheritance. Furthermore, unanticipated inheritances reduce labor supply compared to anticipated inheritances. Additionally, controlling for the termination of caregiving responsibilities resulted in a 25 % larger estimate of the wealth effect of inheritance receipt on labor supply. Finally, pre-inheritance liquidity constraints have no effect on changes in labor supply.

Quantity or quality: who makes manufacturing stronger?

China’s rate of aging population and declining fertility are very rapid. The role of demographic transition in the development of the manufacturing industry remains controversial. We construct a heterogeneous DSGE model that includes demographic dividends to simulate and analyze the impact of demographic transition on the expansion and upgrading of manufacturing industry. Besides, we conduct empirical research using China’s provincial-level panel data from 2003 to 2020. The results reveal that, first, the recession of the first demographic dividend characterized by a decrease in labor supply has suppressed the expansion of manufacturing scale, but promoted structural upgrading; second, the second demographic dividend can promote the growth of output in various manufacturing industries, especially advanced manufacturing; third, receiving the second demographic dividend can offset the negative effect from recession of the first demographic dividend on manufacturing industry. However, the negative impact currently suffered by China’s manufacturing industry cannot be fully compensated for.

Сценарная оценка макроэкономических эффектов прогрессивного налогообложения в России

The purpose of the study is to assess the impact of alternative options of progressive taxation on Russia’s macroeconomic performance. For quantitative assessments, a neoclassical general equilibrium model with heterogeneous households subject to idiosyncratic income shocks was used. Three groups of scenarios were analyzed, setting a threshold progressive tax scale with thresholds of 30, 50, and 70 thousand rubles, under which state income tax revenues (1) grow, (2) remain unchanged, and (3) decline. The maximum personal income tax rate in the analyzed scenarios was 25%. Steady states and transitions were calculated for the scenarios. According to the quantitative estimates, the first reform leads to a loss of 0.3% to 1.3% of GDP in the long run, depending on the assumed rates and threshold. Despite the increase in lump-sum transfers, aggregate household consumption decreases by 0.5–1.7% in all cases. The second reform leads to a loss of 0.2% to 0.6% of GDP in the long run. The third reform leads to insignificant fluctuations of GDP within 0.1%: GDP increases at the threshold of 30 thousand rubles and decreases at other thresholds. The scale of inequality reduction, as measured by the Gini coefficient, increases with an increase in the top tax rate. However, as the threshold increases, the depth of the Gini index reduction first increases and then decreases. In the short run, there is upward pressure on wages and prices. This is because a decrease in labor supply with unchanged capital in the short run leads to an increase in wage rates (a shift along the labor demand curve), and an increase in wage rates means an increase in marginal costs for firms, leading to higher prices.

The poverty alleviation effect of transfer payments: evidence from China

Transfer payments play a crucial role in combating poverty in countries. However, the effectiveness of transfer payments in alleviating poverty remains controversial due to variations in environmental factors, economic development, and cultural contexts across different nations. In this study, we employ counterfactual causal inference to examine the influence of government transfer payments on poverty. By utilizing data from China, we present new evidence that sheds light on related issues. Our findings reveal that transfer payments have a negative impact on the overall income of rural poor households. This can be attributed to a decrease in labor supply among rural poor residents who receive such payments, resulting in reduced wage income. Additionally, transfer payments lead to decreased expenditure on food and increased spending on healthcare. These changes in total income and consumption patterns indicate that China’s current transfer payment policy has short-term efficacy by meeting the basic living security needs of rural poor residents and improving their health conditions. However, the lack of significant changes in education spending suggests that transfer payments have little long-term effect.

A theory of fiscal policy response to an epidemic.

Governments worldwide have issued massive amounts of debt to inject fiscal stimulus during the COVID‐19 pandemic. This paper analyzes fiscal responses to an epidemic, in which interactions at work increase the risk of disease and mortality. Fiscal policies, which are designed to borrow against the future and provide transfers to individuals suffering economic hardship, can facilitate consumption smoothing while reduce hours worked and hence mitigate infections. We examine the optimal fiscal policy and characterize the condition under which fiscal policy improves social welfare. We then extend the model analyzing the static and dynamic pecuniary externalities under scale economies—the decrease in labor supply during the epidemic lowers the contemporaneous average wage rate while enhances the post‐epidemic workforce health and productivity. We suggest that fiscal policy may not work effectively unless the government coordinates working time, and the optimal size of public debt is affected by production technology and disease severity and transmissibility.

Informal housing clearance, housing market, and labor supply

Problems with health and safety are associated with informal housing worldwide and have led some governments to respond by implementing clearance policies. However, informal housing plays an important role in providing affordable living space to people with low incomes. Careful evaluation of these informal housing clearance policies and assessment of their impacts is therefore sorely needed. This paper empirically evaluates the effect of the informal housing clearance move of Beijing, induced by an unexpected fire in November 2017. We find that the informal housing clearance move has a significant impact on a city’s housing market, particularly on rents. Further, the informal housing clearance significantly reduces the size of the city’s labor supply in the short term, but as the wage level in the city rises, part of the city’s labor force returns, resulting in insignificant mid- to long-term effects on the labor supply. These effects also extend to the housing and labor markets of the receiving cities. We further build a spatial general equilibrium model with different types of labor and formal and informal housing that considers individual location choices. The model calibration is consistent with the empirical findings. The model simulation shows that in response to the informal housing clearance policy, the utility levels of both Beijing and the receiving cities decrease. We then examine the policy effects of increasing formal housing supply elasticities, the indemificatory housing, and the threshold of entering the formal housing market. We find that increasing formal housing supply elasticity and indemificatory housing while decreasing the threshold of entering the formal housing market can mitigate the increase in rents and decrease in labor supply caused by the informal housing clearance policies, and compensate for the decrease in utility levels.

Professional activity of women in light of the Family 500+ Program

The article aims to assess the impact of the Family 500+ Program on women’s professional activity. The Family 500+ Program is a governmental support introduced in April 2016 and is designed to assist the families in raising children. The support is provided by monthly payment of PLN 500 for every single child in the family.The study, primarily, attempts to assess the relationship between the level of expenditure on family benefits and the employment rate, and, on the other hand, based on the surveys, to indicate whether the Program encourages women to quit from the formal labor market. The article describes the professional activity of women, the level of social spending in Poland and some selected EU countries. Based on statistical data, an attempt was made to assess the impact of social expenditure on women’s economic activity based on the linear regression method. Based on this method, it was stressed that the amount of benefit has the impact on the economic activity of women and this relationship is highly statistically significant. Fragments of own surveys from 2017 till 2019 were also presented, which suggest that the Family 500+ Program may lead to the withdrawal of women from the labor market. Respondents most often stressed the possibility of appearing reluctance to work for careers in large families. Entrepreneurs’ responses showed the discouraging effect of the Family 500+ Program (35.1% in 2019), which may contribute to a decrease in labor supply according to 16.0% of respondents.

The effect of the New Rural Social Pension Insurance program on the retirement and labor supply decision in China

Abstract In 2009, the Chinese government introduced the New Rural Social Pension Insurance (NRSPI) program; it was expanded nationwide in 2012. This paper investigates the effects of the NRSPI program on retirement and old-age labor supply patterns in China, using two-wave nationwide survey data. After controlling for endogenous bias by using instrumental variables, we found that receiving pension benefits from the NRSPI program can substantially increase the likelihood of retirement and reduce the number of working hours among women, even though the amount of NRSPI pension benefits is far below the minimum cost of living. Furthermore, we broke down the labor supply into agricultural and nonagricultural labor supply, and found that most of the decrease in labor supply stems from the agricultural labor supply. We also found that people from different income brackets, contribution levels, education backgrounds, age groups, and household registration statuses behave differently in their retirement and in terms of labor supply decision-making.

A Small Amount Can Make a Big Difference: The Effect of the New Rural Social Pension Insurance Program on the Retirement Decision in China

In 2009, the New Rural Social Pension Insurance program (NRSPI) was introduced and expanded to nationwide in 2012. This paper investigates the effect of the NRSPI on the retirement and old-age labor supply pattern in China using a two-wave nationwide survey data. Since the NRSPI is voluntary, we use instrument variables to control for the endogeneity bias. We find that receiving pension benefits from the NRSPI can substantially increase the likelihood of retirement and decrease number of working hours for females even though the pension benefit of the pension program is far below the minimum cost of living. We further decompose the labor supply into agricultural labor supply and non-agricultural labor supply, and find that most of the decrease in labor supply is from agricultural labor supply.

Spousal labor market effects from government health insurance: Evidence from a veterans affairs expansion

Measuring the total impact of health insurance receipt on household labor supply is important in an era of increased access to publicly provided and subsidized insurance. Although government expansion of health insurance to older workers leads to direct labor supply reductions for recipients, there may be spillover effects on the labor supply of uncovered spouses. While the most basic model predicts a decrease in overall household work hours, financial incentives such as credit constraints, target income levels, and the need for own health insurance suggest that spousal labor supply might increase. In contrast, complementarities of spousal leisure would predict a decrease in labor supply for both spouses. Utilizing a mid-1990s expansion of health insurance for U.S. veterans, we provide evidence on the effects of public insurance availability on the labor supply of spouses. Using data from the Current Population Survey and Health and Retirement Study, we employ a difference-in-differences strategy to compare the labor market behavior of the wives of older male veterans and non-veterans before and after the VA health benefits expansion. Although husbands’ labor supply decreases, wives’ labor supply increases, suggesting that financial incentives dominate complementarities of spousal leisure. This effect is strongest for wives with lower education levels and lower levels of household wealth and those who were not previously employed full-time. These findings have implications for government programs such as Medicare and Social Security and the Affordable Care Act.

On‐the‐Job Learning and News‐Driven Business Cycles

This paper proposes a new channel of on‐the‐job learning to explain the positive comovement between consumption and employment following good news about future productivity. The new recruits can generate an additional stream of output production in all future periods, and the firm's labor demand is thus characterized by the forward‐looking property. Therefore, the firm is motivated to hire more new recruits in advance in response to good news about future productivity. Once the increase in labor demand is greater than the decrease in labor supply caused by the income effect, the coincident rise in consumption and employment can be driven by the news shock. When such a channel is paired with investment adjustment costs and the endogenous capacity utilization rate, this paper provides a plausible explanation for simultaneous booms in current consumption, investment, output, and employment to match the empirical evidence under the news shock.

The effect of state dependent mandate laws on the labor supply decisions of young adults

Prior to the Affordable Care Act, the majority of states in the U.S. had already implemented state laws that extended the age that young adults could enroll as dependents on their parent's employer-based health insurance plans. Because of the fundamental link between health insurance and employment in the U.S., such policies may effect the labor supply decisions of young adults. Although the interaction between labor supply and health insurance has been extensively studied for other subpopulations, little is known about the role of health insurance in the labor supply decisions of young adults. I use the variation from the implementation and changes in state policies that expanded dependent health insurance coverage to examine how young adults adjusted their labor supply when they were able to be covered as a dependent on their parent's plan. I find that these state mandates led to a decrease in labor supply on the intensive margin.

Spousal Labor Market Effects from Government Health Insurance: Evidence from a Veterans Affairs Expansion

Measuring the overall impact of public health insurance receipt is important in an era of increased access to publicly-provided and subsidized insurance. Although government expansion of health insurance to older workers leads to labor supply reductions for recipients, there may be spillover effects on the labor supply of uncovered spouses. While theory predicts a decrease in overall household work hours, financial incentives such as credit constraints, target income levels, and the need for own health insurance suggest that spousal labor supply might increase. In contrast, complementarities of spousal leisure would predict a decrease in labor supply for both spouses. Utilizing a mid-1990s expansion of health insurance for U.S. veterans, we provide evidence on the effects of public insurance availability on the labor supply of spouses. Using data from the Current Population Survey and Health and Retirement Study, we employ a difference-in-differences strategy to compare the labor market behavior of the wives of older male veterans and non-veterans before and after the VA health benefits expansion. Our findings suggest that although household labor supply may decrease because of the income effect, wives' labor supply increases, suggesting that financial incentives dominate complementarities of spousal leisure. This effect is strongest for wives with lower education levels and lower levels of household wealth. Moreover, wives with employer-provided health insurance in the previous year remain on the job while those without increase their hours, suggesting incentives to retain or obtain health insurance. Finally, non-working wives enter the labor force, those who were working part-time increase their hours, and full-time career women are largely unaffected.

Labor Supply, Biased Technological Change and Economic Growth

We consider a model of factor saving innovations and study the effects of exogenous changes in labor supply. In a biased innovations setting, as economies accumulate capital, labor becomes relatively scarce and expensive. As a consequence, incentives for labor saving and capital using innovations appear. By the same token, exogenous changes in labor supply affect factor prices. In general, a reduction in labor supply decreases current output and generates incentives for labor saving innovations. Therefore, the effect that a change in the supply of labor has on factor prices is mitigated and, depending on the initial conditions, it may be contrasted by the effect of the technological bias. Finally, the movements of the factor prices affect the saving decisions and consequently the dynamics of economic growth. We explore the consequences of an exogenous decrease in labor supply in two different settings: a homogenous agents model with infinite horizon and an overlapping generations model. Se utiliza un modelo de innovaciones sesgadas para estudiar los efectos de cambios exogenos en la oferta laboral. En un contexto de innovaciones sesgadas, a medida que las economias acumulan capital, el trabajo se hace relativamente mas escaso y mas caro, por este motivo, hay incentivos para adoptar tecnologias ahorradoras de trabajo. Del mismo modo un cambio en la oferta laboral afecta la abundancia de factores y sus precios relativos. En general, una reduccion de la oferta laboral, hace que el trabajo sea mas caro y genera incentivos para cambio tecnologico ahorrador de trabajo. Asi, el efecto inicial que tiene el cambio en la oferta laboral sobre los precios de los factores es mitigado por el cambio tecnologico. Finalmente, los movimientos en la remuneracion a los factores afectan las decisiones de ahorro y, por lo tanto, la dinamica del crecimiento. En este trabajo se exploran las consecuencias de una reduccion de la oferta laboral en dos contextos teoricos diferentes: un modelo de agentes homogeneos y horizonte infinito y un modelo de generaciones traslapadas.

The Social Security Earnings Test and Labor Supply of Older Men

The social security earnings test reduces a 65-69-year-old's benefits at a 33-percent rate and a 62-64 year-old's benefits at a 50-percent rate once earnings pass a threshold amount--among the highest marginal tax rates in the economy. Previous research dismissed the importance of the earnings test but failed to take advantage of three more recent changes in the earnings-test rules, each applying to some age groups and not others, in order to identify its impact. Data on earnings distributions before and after these rules changes demonstrate that a significant number of older workers are clustered with earnings just at or below the earnings-exempt amount--so the earnings test leads some beneficiaries to hold down their labor supply. Furthermore, the bunching moves when the exempt amount moves and disappears when the earnings test is eliminated. An econometric model of labor supply is also formulated to incorporate the entire range of beneficiaries' responses to the earnings test. The resulting estimates imply substantial deadweight loss from older workers changing their labor supply to avoid taxation. Simulations predict a 5.3-percent boost to aggregate labor supply from eliminating the earnings test, and at a minimal fiscal cost. In contrast, a slight decrease in labor supply is predicted from the recently legislated increase in the exempt amount. It will be important to keep in mind this apparent sensitivity of older workers to tax and transfer rules conditional on working, which will affect the outcome of policies that attempt to induce people to work longer. Another important consideration involves 62-64-year-olds, who face an earnings test as restrictive as it was in the mid-1970s. The tighter earnings test rules will be extended to 65- and 66-year-olds as the normal retirement age is raised.