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

2021 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, 特任助教 (70835701)
• Project Period (FY): 2019-04-01 – 2023-03-31
• Keywords: Time allocation / Value of time / Gender equality

Outline of Annual Research Achievements

In order to understand the welfare of the households with a married couple and their children, we investigate how better childcare and transport services can increase women’s well-being, enhance household’s utility, and promote gender equality. Our theoretical model considers a married couple’s inter-temporal choices across four life stages: (i) before the children are born, (ii) after the children are born but before the first child becomes aged 6, (iii) after the first child becomes aged 6 but before the married couple retire (iv) after the married couple retire. Household’s utility consists of composite goods, dwelling sizes, the number of children, and individual’s time on leisure, and childcare over the four stages.

Assuming that a couple together share a financial resource but have different values of time (VOTs) to manage their activities, we define the following constraints that restrict the married couple: one income constraint, two time constraints, and a technology constraint on childcare time. The technology constraint describes the minimum amount of time that the couple need to contribute to 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 the household’s value of childcare time saving (VOCTS). We have derived a statistical model directly from the theoretical model and have applied the empirical data to the model using the 2004-2018 Keio/Japan Household Panel Survey (KHPS/JHPS) conducted by Keio University.

Current Status of Research Progress

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

Reason

Focusing on the life stages after the married couple’s children are born but before their retirement, we have conducted the empirical analyses based on the 2004-2018 KHPS/JHPS and a two-stage analysis of factors associated with the number of household children, the married couple’s levels of education, working hours, commuting time, and the household’s minimum required time on childcare. The first stage of the analysis is the instrumental variables estimation that helps account for the endogeneity problem of commuting. The instrumental variables (IVs) in this study are measured by the ratio of children on the waiting list in the region where the household lives and the number of cars per 1000 people in the prefecture where the household resides. The IV estimations on commuting are separately conducted for the husband and wife before and after the first child becomes aged 6.

The second stage of the analysis disentangles the relative influences of the predicted values of commuting time and other exogenous variables on the household’s remaining budget (i.e., dependent variable). We have obtained the estimated VOTs for the husband and the wife as well as the household’s VOCTS before and after the first child becomes aged 6. Based on the empirical results, we are currently organizing our materials and preparing a manuscript for submission to a journal.

Strategy for Future Research Activity

The gender equality in welfare, however, could often be determined by the market equilibria not only among households but firms and land developers. Since the approach described and the results obtained in the previous sections are based on a partial equilibrium method that only considers the market sector of households, we plan to develop a general equilibrium 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 were not able to travel for any international conferences over the past few years. Therefore, we will primarily use the incurring amount of budget for the enrollment fees and travel expenses for domestic and international conferences.