Explaining the persistence of the gender wage gap in Japan: The ‘glass ceiling’ and the ‘sticky floor’

Prof Hiromi Hara has a piece on gender wage gap in Japan. The research is also quite apt given she works in Japan Women’s University.

She says both glass ceiling and sticky floor exist in Japan. The reason is quite interesting. Most Japanese companies follow this system which incentivises employees to stay beyond office hours. This appeals mainly to men as women leave to work at homes:

Although the gender wage gap in Japan has been decreasing over the last 15 years, it remains large. This column shows that both the ‘glass ceiling’ and the ‘sticky floor’ exist in the Japanese labour market….

Why do both the glass ceiling and the sticky floor exist in Japan? One factor behind the gender wage gap in Japan could be the characteristic human resource management system (that also has been adopted by companies worldwide) aimed at promoting employee participation and productivity in order to improve economic performance. The Japanese human resource management system, also known in the literature as the ‘innovative human resource management model’ or ‘high-performance work practices’, has attracted great interest from business leaders and researchers.4The positive aspects of the Japanese human resource management system have long been emphasised, and this is bolstered by the ample empirical evidence that it actually improves a company’s productivity.

However, a dark side to the Japanese human resource management system also exists. When companies introduce the system, gender segregation tends to take place because incentive schemes which prompt workers to willingly perform firm-specific human capital investment and remain at the company are key for making the system work. Theoretically, the company expects, ex ante, a high probability that a female worker will leave because she has a better outside option, which is her higher value of household production. Consequently, male workers are likely to be assigned to career-track jobs with a large emphasis on firm-specific skills that are highly valued and rewarded disproportionately while female workers are more likely to be assigned to non-career- track jobs with little opportunity to accumulate firm-specific skills. Such gendered job segregation could contribute to the gender wage gap.5

In fact, such a system, called the ‘career track-based management system’, exists in the Japanese labour market.6 This could cause quite a few women to be stuck in low-paying jobs, which might cause the sticky floor phenomenon.

In addition, Japanese companies have developed a wage determination system which rewards disproportionately workers who work long hours and particular hours (e.g. late at night and during holidays).7 Women are likely to choose jobs without long working hours or opt for flexible work. This could explain why women may not receive very high wages, which might be one of the reasons behind the glass ceiling.

To check whether these hypotheses are valid, I also perform the same analysis by company size and obtain different results for large and medium-size companies.8 When I restrict the analysis sample to workers at large companies with over 1,000 employees, the sticky floor is still observed, but the glass ceiling disappears. This suggests that the sticky floor phenomenon can be explained by the fact that female workers tend to be segregated into non-career-track jobs and thus do not accumulate higher-value, firm-specific skills. In contrast, when the analysis sample is restricted to workers at medium-size companies (100-999 employees), the glass ceiling is observed clearly, which could be explained by the wage determination system, although further research is necessary to conclude that.

We can say that the coexistence of the glass ceiling and sticky floor phenomena appears to be related to the Japanese human resource management system, and that restructuring it might be necessary for further reduction in the gender wage gap in Japan.

Interesting..

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One Response to “Explaining the persistence of the gender wage gap in Japan: The ‘glass ceiling’ and the ‘sticky floor’”

  1. Oleg Komlik Says:

    Very interesting… See also this one: Why the equal employment opportunity for women laws have failed in Japan — asks and answers Prof. Eunmi Mun (the fifth link)
    https://economicsociology.org/2017/01/18/bits-briefs-historical-perspectives-on-modern-finance-social-insurance-isnt-socialism-blocking-class-action-lawsuits-by-wall-street-failure-of-equal-employment-laws-in-japan/

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