RIETI Report February 24, 2023

Path to Correcting Gender Inequality: Information disclosure and data use are the key

Dear Readers,
Welcome to RIETI Report.
This bi-weekly newsletter will keep you updated with the recent columns, event information and research results by RIETI fellows and other leading economists in Japan and around the world.

In this edition, we present topics related to how information disclosure and data use will mitigate gender inequality. Faculty Fellow Hideo Owan and his team have developed and started providing a software tool to companies to increase the visibility of gender wage differences using regression analysis, controlling for basic attributes that may affect wages. Owan says that monitoring is necessary, but the most important thing is that management teams commit themselves in correcting gender inequality if they want to increase their reputations in the labor and capital markets.

We hope you will enjoy it. If you have any feedback, we would love to hear from you (news-info@rieti.go.jp).
Editors of RIETI Report (Facebook: @en.RIETI / Twitter: @RIETIenglish / URL: https://www.rieti.go.jp/en/)

This month's featured article

Path to Correcting Gender Inequality: Information disclosure and data use are the key

OWAN HideoFaculty Fellow, RIETI

To address gender inequality, it is necessary to first identify its existence and size and then provide appropriate incentives for companies to make serious efforts to reduce it.

In July 2022, the Japanese government mandated companies with a workforce of more than 300 employees to disclose information on their “gender wage difference.” Under its “policy to prioritize women empowerment and gender equality,” those companies are required to disclose the ratio of the wage level for women to that of men for both regular and non-regular employees. However, if the average wage levels for men and women are simply compared while ignoring other variable factors, the results would reflect differences not only by gender but also by age, educational background, and years of service.

Let us consider this problem by looking at concrete examples. In the case of chemical manufacturer Company A, a large proportion of employees in the production division are men with only a senior high school diploma, while the research and development division has many female workers with a master’s or doctor’s degree. In other words, a simple comparison in this case would be between the averages for a female employee group represented mostly by high academic achievers and a male employee group that included many low academic achievers. Under this comparison, gender wage inequality within the same type of job would be obscured by the difference in gender distribution across job types.

On the other hand, in the case of food manufacturer Company B, the majority of employees in management positions are men, while most women are engaged in junior clerical jobs. If the group of female employees, most of whom are relatively young and who are mostly concentrated in lower brackets in terms of both educational background and years of service, is compared with the group of male employees, who vary widely in terms of those attributes, gender wage inequality would be significantly exaggerated by differences due to other attributes.

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“Dynamics of the Gender Gap in the Workplace: An econometric case study of a large Japanese firm”
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[List of upcoming and past symposiums]
[List of upcoming and past BBL seminars]

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