Overseas Expansion of Japanese Firms and Domestic Women’s Empowerment

This paper empirically examines whether globally operating firms responded to institutional changes promoting women’s participation in the workplace by reducing gender wage disparities to a greater extent. We construct a dataset by linking the Basic Survey on Wage Structure (Ministry of Health, Labour and Welfare) with the Basic Survey of Japanese Business Structure and Activities (Ministry of Economy, Trade and Industry). Using a triple-differences approach, we estimate changes in gender wage gaps before and after the institutional change under the Act on Promotion of Women’s Participation and Advancement in the Workplace, taking into account the presence, scale, and geographic scope of foreign direct investment (FDI). The results indicate that firms engaging in FDI experienced a statistically significant narrowing of gender wage gaps compared with firms without FDI, and the effect was stronger in firms with larger numbers of foreign affiliates. These findings suggest that firms with greater global exposure were more responsive to the institutional change and more likely to undertake employment adjustments and reforms toward gender-equal work environments. In addition, the analysis reveals that firms with affiliates in countries or regions with larger time-zone differences from Japan exhibited relatively weaker effects, potentially disadvantaging female employees and minimizing the impact of the institutional change.