Welfare Analysis of Childcare and Transport Policies for Married Couples: A Microeconomic Study

2020 Fiscal Year Research-status Report

• Project/Area Number: 19K13673
• Research Institution: Tohoku University
• Principal Investigator: 羅 婉慈 東北大学, 情報科学研究科, 学術研究員 (70835701)
• Project Period (FY): 2019-04-01 – 2023-03-31
• Keywords: Time allocation / Commute pattern / Value of time / Gender equality

Outline of Annual Research Achievements

Focusing on the welfare of the households with a married couple and children, we aim to investigate how better childcare and transport services can increase women’s well-being, enhance household’s utility, and promote gender equality. We have developed a theoretical model that accounts for a heterosexual married couple’s intertemporal choice across three life stages: before the children were born, after the children were born but before they became grown-ups, and after the children became grown-ups. Household’s utility consists of composite goods, dwelling sizes, the number of children, and individual’s time on leisure, commute, and childcare over the three stages. To explain the couple’s relative power within the family, we further include the difference in age between the couple and their education attainments in the utility function.

The household utility is subject to the constraints restricting married couples in time, income, and technology. We have defined two time constraints assuming that a couple together share a financial resource, but have different values of time (VOTs) to manage their activities. Introducing different time constraints for the married couple could help elucidate the societal gender disparity in terms of their use of time. The technology constraint describes the minimum amount of time that the couple spend on childcare, assuming that the couple perfectly substitute the childcare time for each other. These constraints are considered in the Lagrange multipliers, which help understand the couple’s VOTs and how they enjoy childcare.

Current Status of Research Progress

2: Research has progressed on the whole more than it was originally planned.

Reason

Given the study intends to analyze the influences of childcare and transport services on married couples with young children (i.e., the second stage), household incomes in the first and thrid stages are assumed to remain unchanged so the utility in these stages does not affect the one in the second stage. We have completed all of the formulations (i.e., the marginal indirect utilities with respect to household income, unit dwelling price, cost per child, individual’s commute time, minimum required time for childcare) based on the Karush-Kuhn-Tucker conditions and the envelop theorem.

To apply the theoretical model to empirical analyses (e.g., multinomial regression), we use the 2004-2018 Keio/Japan Household Panel Survey (KHPS/JHPS) conducted by Keio University. We have extracted the sample from a subset of the 1310 households living in the designated cities of the Kanto region. The sample retains the households with complete information on time use (i.e., the time spending on commute and childcare) and socio-demographics (i.e., age, gender, marital status, household composition, income, employment, housing, and education attainment). To define the minimum required time on childcare for the technology constraint, we have employed a cluster analysis using the KHPS/JHPS data. To approximate to household’s attributable rent and income growth rate (i.e., to obtain the change in household income over the second stage), we have collected and analyzed the supplemental data from Japan Housing Finance Agency, Statistics Bureau of Japan, and National Tax Agency.

Strategy for Future Research Activity

Multinominal regression analyses are being developed and will be conducted in the near future. We will regress the married couples’ commute choices on the socio-demographic variables, commute time, and minimum time on childcare for the sample households. Using the estimated coefficients, we will compare the married couple’s values of time and examine how transport and childcare-related policies could influence household utility and the associated decisions on commute. Policy implications will then be drawn based on the results of our analysis.

The gender equality in welfare, however, could often be determined by the market equilibria among households, firms, and land developers. Since the approach described in the previous sections is a partial equilibrium method that only considers the market sector of households, we will thus develop the computational general equilibrium (CGE) model by additionally incorporating the labor and housing markets. The new model will enable a comprehensive welfare analysis for childcare and transportation policies and provide insights into the policy influences from the perspectives of market equilibria. The manuscripts based on the results of our analyses will be submitted to peer-reviewed journals.

Causes of Carryover

We have not purchased ESRI ArcGIS and were not able to travel for any international conferences. Therefore, we will primarily use the incurring amount of budget for the following plans:
1. Enrollment fees and travel expenses for international conferences
2. ESRI ArcGIS license