Japan’s economy has been in the headlines this year as inflation returns for the first time in decades, workers enjoy wage gains and the Bank of Japan raises interest rates for the first time in 17 years.
But there is another, longer-lasting trend in the Japanese economy that could prove of interest to American policymakers: female employment is steadily increasing.
Working-age Japanese women have been entering the workforce for years, a trend that has continued strongly in recent months as a tight labor market pushes companies to attract new employees.
The surge in female participation is partly intentional. Since around 2013, the Japanese government has been trying to make both public policy and corporate culture more women-friendly. The aim was to attract a new source of talent at a time when the world’s fourth-largest economy is facing an aging and shrinking labor market.
“Japan has made good progress in building the care infrastructure for working parents over the past decade,” wrote Nobuko Kobayashi, partner at EY-Parthenon in Japan, in an email.
Still, even some who were there when the “Womennomics” policy was drafted were surprised at how many Japanese women are now choosing to work, thanks to policy changes and shifting social norms.
“We all underestimated it,” said Adam Posen, president of the Peterson Institute for International Economics, who advised the Japanese government on introducing policies to employ more female workers. Mr. Posen estimated at the time that they might succeed in bringing perhaps 800,000 women into the workforce, far fewer than the roughly three million who actually joined (although many of them are part-time).
It’s a surprise that could serve as an important reminder to business leaders around the world. Economists often try to guess by extrapolating from history how much a country’s workforce can grow – and they tend to assume that there are limits to how many people can be lured into the workforce, some likely working as caretakers or others stay at home other reasons.
But history has served as a poor guide in Japan over the past decade as social standards, marriage rates and birth rates have changed. And the lesson from the Japanese experience is simple: Women may represent a larger workforce than economists typically expect.
“Obviously women wanted to work in Japan,” Mr. Posen said. “It raises the question of what is a reasonable expectation of women’s labor force participation.”
This message could be relevant to the United States’ central bank, the Federal Reserve.
How much room the U.S. labor market has to expand is a key question for the Fed in 2024. Over the past year, inflation in the United States has fallen and wage pressures have eased, even as hiring remained high and the economy grew rapidly expanded. This positive result was possible because the country’s labor supply increased.
Labor force growth in recent years has come from two major sources: immigration has increased and labor force participation is recovering after falling during the pandemic. This is particularly true for women in their prime working years, ages 25 to 54, who are participating in the labor market at record or near-record rates.
Now economists are wondering whether the expansion can continue. Immigration to the United States appears to be continuing: Economists at Goldman Sachs said the United States could absorb about a million more immigrants than normal this year. The question is whether participation will continue to increase.
At the moment it seems as if things have leveled off overall over the last year or so. As the population ages and older people work less, many economists expect the total number to remain stable and even decline over time. Given these trends, some economists doubt whether the improvement in labor supply can be sustained.
“Further realignment of the labor market must occur through slower growth in labor demand rather than through continued rapid growth in labor supply,” an analysis by the Federal Reserve Bank of San Francisco concluded this year.
But in the late 2010s, economists also believed that the American labor market had little room to absorb new workers – and then were surprised to see people keep coming back from the sidelines.
And while work rates for prime-age women have remained fairly stable since last summer, Japan’s experience raises the question: Could American women, in particular, end up working in larger numbers?
The labor force participation of working-age women in the United States used to be higher than in other advanced economies, but it has now been surpassed by many, including Japan since 2015.
Today, about 77 percent of prime-age women in the United States have a job or are looking for one. That number is about 83 percent among Japanese women, up from about 74 percent a decade ago and about 65 percent in the early 1990s. Japanese women’s participation in the workforce is about the same as in Australia, although labor force participation among working-age women is still higher in some countries such as Canada.
These changes came about for several reasons. On the one hand, the Japanese government has taken important political steps, such as increasing the capacity of daycare centers.
The country’s changing attitude towards family also contributed to women having more time for work. The average age of people getting married for the first time has been steadily rising and birth rates are at record lows.
“Delaying marriage, delaying the time to have children, not getting married at all — that’s the big societal backdrop,” said Paul Sheard, an economist who has long focused on the nation.
But there were limits. There is still a tax penalty for second earners in the country, and the quality of jobs that women have is not great. They are often paid less and have limited working hours. Women are also largely absent from leadership positions in Japanese companies.
Kathy Matsui, the former vice chair of Goldman Sachs Group’s Japan division and the woman who launched the Womenomics idea, said the effort needed further work.
Still, Japan’s experience could provide clues to what lies ahead in the United States. In America, for example, fertility and marriage rates are also declining, which could create scope for labor force participation rates among young and middle-aged women to continue rising in the short term, even as this lays the foundation for a smaller population and economy in the future. Remote or hybrid work arrangements could also make work easier for caregivers.
And some of Japan’s more family-friendly policies could be a model for the United States, experts say.
“Japan has made good progress in building the care infrastructure for working parents over the past decade,” said Ms. Kobayashi of EY-Parthenon, noting that the number of children on kindergarten waiting lists this year was up from 19,900 five years earlier fell to 2,680.
But Japan could learn from the more flexible work culture of the United States, said Wendy Cutler, vice president of the Asia Society Policy Institute. This allows women to avoid leaving the labor market and having their careers interrupted by the birth of children.
“It is becoming increasingly important to pay attention to the quality of these jobs,” Ms. Cutler said.
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2024-03-19 16:10:20
www.nytimes.com
