The response of Japanese wives ’ labor supply to husbands ’ job loss

This paper examines how Japanese wives react to their husbands’ involuntary job loss and tests the existence of complementarity of a wife’s labor supply to her husband’s. Utilizing panel data on Japanese households from 1993 to 2004, we found that wives’ labor supply is stimulated when husbands suffer involuntary job loss. The detailed statistics show that not only do working wives raise their labor hours but also nonworking wives begin to participate in the labor market. The added worker effect is evident during the period of job insecurity in Japan following the mid-1990s.