The Gender Wage Transparency Policy: Discussion on disclosure of wage differentials between men and women based on the Act on Promotion of Women's Participation and Advancement in the Workplace

Since the 2000s, gender wage/pay transparency policies have been adopted in many countries to reduce the wage gap between men and women. In Japan, this policy was introduced in July 2022 with the revision of the Ministry of Health, Labor and Welfare Ordinance of the Act on Promotion of Women’s Participation and Advancement in the Workplace (Josei Katsuyaku Suishin Hou). This paper analyzes and discusses the issues related to this policy. First, statistical information on gender wage differentials within an establishment is shown using micro data from government statistics. Second, a regression analysis is conducted to explore workplace attributes that correlate with wage differentials between men and women to provide information that will allow each company to analyze its own gender wage gap when publishing it. The results show that wage differentials between men and women for all workers are correlated with the gender difference in actual hours worked and years of service, the percentage of women in the establishment and the percentage of nonregular workers among female employees, and the percentage of women in management positions. Furthermore, a literature survey of previous studies on the policies in other countries reveals several countries where a reduction in the wage gap between men and women has been observed after controlling for the gender gap in human capital. Finally, this paper shows that the raw gender wage gap at the median is 27.3% in 2021, but more than half of the observed gap (54.2%) cannot be explained by gender differences in human capital. Although unexplained gender wage disparities still exist in Japan, based on the experience of other countries, it is expected that this policy could lead to a reduction in disparities. However, future policy evaluations using Japanese data are necessary.