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 bene...t from labor force participation, and that this gain exceed ...nancial bene...ts from earnings. However, the probability of ...nding 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 ...rst child are insigni...cant or rather negative, those from the second child are signi...cantly positive, those from the third or subsequent child are generally insigni...cant. Utility gains and losses from marriage are signi...cantly negative if one leaves out ...nancial 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.