A Way to Resolve the Gender Inequality in Wage: Economic irrationality of statistical discrimination

This paper analyzes gender inequality in hourly wage that is still quite sizable in Japan. It does so first by breaking down the gender wage gap to its components: the gap within each type of employment, the gap arising from the gender difference in the distribution of employment types, and the gap arising from the gender difference in the age distribution of employees. I observe that gender wage gap among full-time regular employees is the largest contributing factor to this inequality, and discuss that at the root of this there is a problem of statistical discrimination against women based on a high rate of their job separations. I explain why the statistical discrimination has been continuing in Japan and identify four specific reasons why this does not have economic rationality for companies. Through these analyses, I show the way to promote gender equity in economic activity in Japan by eliminating the statistical discrimination through rational choices.