The Impact of the Minimum Wage on Intra-household Decision-making: Evidence from Japan

Abstract In this study, I examine the impact of increasing the minimum wage on gender inequality within Japanese households. Employing a Difference-in-difference approach, I assess the effects on employment rates, hourly wages, and time allocation for both husbands and wives in Japan. Additionally, I estimate the disparity in hourly income between husbands and wives. The study analyzes the variation in time allocation as well. By utilizing data from the Japanese Household Panel Survey, the findings indicate that women, both with and without young children, respond positively to the increases in the minimum wage by increasing their employment rate, while husbands, in general, do not show significant responsiveness. However, both wives and husbands with young children exhibit a higher level of responsiveness to the minimum wage increase. Furthermore, raising the minimum wage helps reduce the gender wage gap within the household by encouraging wives to enter the labor force and work longer hours. Regarding time allocation, both wives with and without young children respond to the wage incentives, with those without young children reducing their investment in home production, and those with young children sacrificing leisure time. It is essential to note that the minimum wage hike primarily proves effective in reducing the gender wage gap within the labor market, rather than within the realm of home production. JEL Classification: J12 , J16 , J22. J31