Family Policies and Female Employment in Japan

Abstract

This paper discusses how childcare and parental leave policies affect female employment by reviewing the international evidence and recent papers on Japan. These papers estimate causal effects of policies by exploiting policy changes, which is a more credible identification strategy than those applied in earlier observational studies. The literature on parental leave finds that a more generous leave package tends to delay mothers' return to work, but it does not have detrimental effects on maternal labour supply in the medium to long run. Some papers also find that provision of job protection for around 1 year can increase maternal employment, but longer job protection has little additional effects. The literature on childcare policies finds that maternal employment does not necessarily increase, because the expansion of childcare may crowd out informal childcare arrangements, such as care provided by grandparents. Findings by recent papers on Japan are largely consistent with the international evidence. JEL Classification Numbers: J13, J21, J24.

An Assessment of Abenomics from the Labor Market Perspective

“…To summarize, the employment flow analysis reveals that the increase in the employment rate of working-age females is largely due to an increased entry rate among those 15-34 years old. This finding is consistent with the findings of previous studies that various family policies such as the expansion of parental leave and publicly provided child care have made it easier for females to re-enter the labor market after child bearing (Nagase, 2017;Nishitateno & Shikata, 2017;Yamaguchi, 2017).…”

“…Initially, parental leave covered only regular workers, but coverage was extended to nonregular workers in 2005 at which time the replacement rate was increased to 50% for both regular and nonregular workers. Yamaguchi (2017) demonstrates that while the provision of one-year job protection contributed to a 0.54 percentage point increase in the rate of female employment after child bearing, the 1995 cash benefit had no effect on employment, as Asai ( 2012) also finds regarding the cash benefit increase in 2001. It is important to note, however, that the aforementioned reforms were implemented in the 1990s and 2000s, and so cannot account for the increase in the rate of employment among working-age females during the Abe era.…”

Policy Generosity, Employer Heterogeneity, and Women’s Employment Opportunities: The Welfare State Paradox Reexamined

“…Also, studies analyzing family policies in Japan have not found a clear effect of new policies on women’s employment. Research using macro-level data finds that parental leave and childcare benefits increase women’s employment and retention (Takeishi 2007; for a review, see Yamaguchi 2016), whereas studies using individual-level data find either no effect (Asai 2015; Asai, Kambayashi, and Yamaguchi 2015) or negative associations with women’s employment outcomes (Kato, Kawaguchi, and Owan 2013; Kodama 2007).…”

“…The revisions focused on complementing the 1992 law by incrementally increasing the amount of leave benefits. The 1992 law mandated that employers with more than 30 employees provide a year of childcare leave, but its 1995 revision extended this to all employers (Yamaguchi 2016). Another revision in 1999 required employers to guarantee the unconditional provision of childcare leave benefits and instructed employers to allow employees with a child under three years of age to reduce their work hours and be exempt from overtime work (Kawaguchi 2013).…”

“… 2. The 1992 Childcare Leave Act did not mandate wage replacement, but it was soon supplemented by the revision of the Employment Insurance Law in 1994, which mandated a childcare leave allowance of 25 percent of wages. Through three more revisions of the Childcare Leave Act in 2001, 2005, and 2007, the rate of wage replacement during parental leave eventually increased to 50 percent (Yamaguchi 2016; Yamakawa 1994). Although wage replacement that increases employers’ financial burden may be a reason for statistical discrimination against women, we do not analyze its effect, because the replacement rate increased gradually over time and the Japanese government increased benefits to employers to reduce their burden.…”