Daiji Kawaguchi

Green Taxes and Double Dividends in a Dynamic Economy

This paper examines a revenue neutral green tax reform along the lines of the Double Dividend hypothesis. Using a dynamic general equilibrium model calibrated to the US economy, we find that increasing gasoline taxes and using the revenue to reduce capital income taxes does indeed deliver both types of welfare gains: from higher consumption of market goods (an efficiency dividend), and from a better environmental quality (a green dividend), even though in the new steady state environmental quality may worsen. We also find that, given the available evidence on how much households are willing to pay for improvements in air quality, the size of the green dividend is very small in absolute magnitude, and much smaller than the efficiency dividend.

Compensating Wage Differentials among Self-Employed Workers:Evidence from Job Satisfaction Scores

Previous studies have found that self-employed workers with long business tenure earn less than other workers with similar characteristics. This difference in earnings can be explained by the compensating wage differential theory when self-employed jobs have attractive non-earnings aspects. Using the National Longitudinal Survey of Youth 79 (NLSY79), I test whether moves in and out of self-employment are associated with changes in recorded job satisfaction scores. By looking at changes in individualsf job satisfaction over time, I overcome the difficulty of interpreting differences in subjective job satisfaction scores across individuals associated with cross-sectional analysis. Using my estimates, I calculate the monetary value of the non-pecuniary aspects of self-employment and find that the value of self-employment in terms of job satisfaction is sufficiently high enough to support the compensating differential hypothesis as an explanation for lower earnings among self-employed workers.

The Incidence and Effect of Job Training among Japanese Women

Using panel data of Japanese women, this paper analyzes who participates in firm-initiated training programs and the effect of this participation on wage level and wage growth. The analysis found that workers with stronger educational backgrounds are more likely to participate in firm-initiated training activities. Training participation and wage are positively correlated. Even after controlling for endogenous selection into training participation by a first-difference estimation, current training participation significantly explains current wage growth.

Who bears the cost of the business cycle? Labor-market institutions and volatility of the youth unemployment rate

The way age-specific unemployment rates fluctuate over the business cycle differs significantly across countries. This paper examines the effect of labor-market institutions on the fluctuations of age-specific unemployment rates based on panel data of 18 OECD countries between 1971 and 2008. Empirical results suggest that the cost of the business cycle disproportionately falls on youths in countries with stricter employment protection. This implies that a higher adjustment cost of an existing workforce induces the employment adjustment of new entrants into the labor market.JEL codesE24, J80

Is Minimum Wage an Effective Anti-Poverty Policy in Japan?

This paper considers whether the minimum wage is a well-targeted antipoverty policy by examining the backgrounds of minimum-wage workers. Whether raising the minimum wage reduces employment for unskilled workers is also investigated. An examination of micro data from a large-scale government household survey, the Employment Structure Survey (Shugyo Kozo Kihon Chosa), reveals that approximately half of minimum-wage workers belong to households with annual incomes of more than 5 million yen as a non-head of household. A regression analysis indicates that an increase in the minimum wage moderately reduces the employment of male teenagers and middle-aged married women, while it encourages the employment of high-school age youth.

Negative Self Selection into Self-employment among African Americans

Abstract This paper attempts to shed light on the mechanism behind the lower rate of self-employment (SE) among African Americans compared with whites. Both consumer discrimination and discrimination in the credit market, combined with anti-discrimination law enforcement in the salary/wage (SW) sector, explain why African Americans, those with high earning capacity in particular, are less likely to be SE because the cost of being discriminated against is high. Borjas and Bronars (1989) tested negative self-selection into SE among African Americans using Heckmans sample-selection correction under certain excluded variable assumptions. Using matched CPS panel data, this paper tests the same prediction without relying on any excluded variable assumptions. More specifically, current SW workers are divided into future SW and SE workers, and the distributions of the current earnings of these two groups are compared. The analysis reveals both positive and negative self-selection into SE among whites, but almost only negative self-selection among African Americans. This finding is consistent with the theoretical predictions of consumer and credit market discrimination against African-American self-employed workers and confirms Borjas and Bronars (1989)s empirical results.

Labor-Market Attachment and Training Participation

This paper examines how expected attachment to the labor market and expected tenure at a specific firm affect training participation. The results, based on cross-sectional data from Japan, indicate that expected attachment to the labor market affects participation in both employer- and worker-initiated training, while expected tenure at a specific firm mainly explains participation in employer-initiated training. These two attachment indices explain almost half of the gender gap in training participation. Employers in a less competitive labor market are more likely to offer employer-initiated training to their workers.

The Union Wage Effect in Japan

Previous studies point to Japanese labor unions lack of bargaining power that results from their organization at an enterprise level. However, a detailed examination of the institutional setting backed by the Labor Standard Law and Trade Union Law reveals that unions have strong bargaining power against deteriorating work conditions. This paper examines the effect of unions on wages using the Japanese General Social Surveys 2000-2003, which cover a period of economic stagnation. We find a robust union wage premium for both males and females. A CottonNeumark decomposition reveals that about one-fifth of union workers higher wage is explained by the difference in the union and nonunion wage structures. We also can confirm the union wage compression effect using the DiNardo, Fortin, and Lemieux (1996) method. Union workers are likely to think that they will not find jobs with similar compensation packages if they leave their current jobs. In summary, unions in Japan contribute to an increase in the average wage and compress the wage distribution among their workers. This result is reconciled with previous findings by considering the uniqueness of the macroeconomic conditions of the sample period.

Researchers' career transitions over the life cycle

Based on a unique time-use survey of academic researchers in Japan, this study finds that research time decreases over the life cycle. The decrease in total hours worked and the increase in time spent on administrative tasks explain the decrease in research time. We also show that the decrease of research time partly explains why the research output of older researchers’ decreases. The results suggest that proper incentives and job designs for senior researchers may increase their research output.

Incidence of Strict Quality Standards: Protection of Consumers or Windfall for Professionals?

This paper examines the effects of upgrading product quality standards on product and professional labor market equilibriums when both markets are regulated. The Japanese government revised the Building Standards Act in June 2007, requiring a stricter review process for approving the plans of large-scale buildings. This regulatory change increased the wages of certified architects in Tokyo by 30 percent but did not increase their total hours worked because of an inelastic labor supply. The stricter quality standards created a quasi rent for certified architects and owners of condominiums at a cost to consumers. Evidence suggests that the new standards increased the transaction price of existing condominiums by 15 percent in the Tokyo metropolitan area.