Promotion of Women's Economic Activities and the Recovery of Japanese Firms from their Dysfunctions

This paper discusses the promotion of women's economic activities in Japan, investigating the causes of gender wage gap, and exposes the dearth of Japanese firms that actively promote employment of women despite their higher productivity. The paper then explains the central role of the employment system in the delay in the promotion of women's economic activities in Japan, elucidating the evolution of this employment system—the result of rational choices under specific historical conditions and the notion of strategic rationality in institution building. Furthermore, the paper clarifies how the employment institutions established under these circumstances came to experience a sub-optimal equilibrium by failing to adapt themselves to historical changes in external conditions, and how the promotion of women's economic activities can be a breakthrough for such dysfunctional inertia of Japanese firms. Based on these findings, the paper introduces general principles for a society in which people can fully develop their capabilities, and makes concrete policy proposals that would bring about changes in social institutions that currently hinder the promotion of women's economic activities.