More Japanese women are working—but for the economy to thrive they need to be running things

January 17, 2014
Obsession
abenomics
January 17, 2014

Japan sure has it tough: Even if the world’s third-biggest economy triumphs against deflation, a rapidly aging population will make it increasingly hard to achieve economic growth. You know what would be amazing? If it had a secret weapon that could somehow bring in new talented workers and supercharge its economy.

Oh, wait. It does have that. Adding 8.2 million women to Japan’s workforce—which is what would happen if women joined the workforce at the same rate as men—would add a whopping 15% to its GDP, according to Goldman Sachs economist Kathy Matsui. Others argue the impact would be around 9% (pdf, p.19), which is still a lot.

Fortunately, this is starting to happen (h/t @JacobWolinksy). In Nov. 2013, female labor participation among women 15 to 64 hit a record-high of 66%, a big jump from the 63.9% a year earlier (data available here):

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Based on annual data except for 2013, which reflects labor force participation as of November.​

Now, that doesn’t necessarily mean that Shinzo Abe’s policies to encourage women to work—expanding free child care services, asking corporations to allow a kind-of-insane three-year maternity leave, and directing government ministries to hire more women—necessarily deserve the credit.

For one, these jobs could be temporary; the Japanese government data don’t specify whether these new working women are housewives who have taken on part-time work. Female labor participation often jumps when real wages fall (pdf, p.3), says Credit Suisse. That could mean households are simply reacting to inflation. If the jump in employment is in mostly unskilled sectors, where workers are fungible, it wouldn’t signal a societal shift.

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As you can see, sectors that employ lots of women tend to be unskilled jobs.("The Political Economy of Gender in Japan in Comparative Perspective," Frances Rosenbluth)

It’s in those skilled jobs that women face a tremendous amount of hiring discrimination and are frequently passed over for promotions, particularly at large companies. At present, only 1.6% of executives (paywall) at publicly traded Japanese companies are women. Japan could use the boost to productivity that would come as men in top jobs faced fiercer competition from the country’s most educated women. And when it comes to those, Japan’s got a pretty deep bench:

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