By Chad Steinberg; Masato Nakane

Summary:

Japan's potential growth rate is steadily falling with the aging of its population. This paper explores the extent to which raising female labor participation can help slow this trend.

Using a cross-country database we find that smaller families, higher female education, and lower marriage rates are associated with much of the rise in women's aggregate participation rates within countries over time, but that policies are likely increasingly important for explaining differences across countries.

Raising female participation could provide an important boost to growth, but women face two hurdles in participating in the workforce in Japan. First, few working women start out in career-track positions, and second, many women drop out of the workforce following childbirth.

To increase women’s attachment to work Japan should consider policies to reduce the gender gap in career positions and to provide better support for working mothers. 

From the Introduction: 

We argue that Japan needs to do two things.

First, it must end the gender gap in hiring and promotion practices. Japan has by far the lowest rate of female managers among advanced economies. Increasing the number of  women role models would influence women’s career choices. Second, Japan must do more to support working mothers. A more flexible work environment and better child care facilities
would help stanch the outflow of women from the workforce after childbirth. We think these policies would also be effective in reducing the high incidence of poverty among single mothers.

To achieve these changes, the following measures could be considered: (1)
reallocating public resources away from monetary benefits to in-kind benefits, such as child care facilities, that would help support working mothers; (2) deregulating the child care industry to help increase the number of facilities; (3) extending the duration and broadening the coverage of parental leave policies; (4) eliminating institutional exemptions on spousal income in the social security and tax systems; (5) reducing disparities between part-time and full-time workers; (6) encouraging firms to adopt more flexible work environments; (7) ensuring that current promotion and employment policies are enforced equitably to help increase the number of female career employees; (8) introducing a new, more flexible labor
contract for career employees that would reduce hiring risks for firms; and (9) possibly establishing new rules for the number of female directors on corporate boards.

Free Full Text:  http://www.imf.org/external/pubs/ft/wp/2012/wp12248.pdf

Disclaimer:   The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the Internatinal Monetary Fund  or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

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