This paper uses a structural model to compare and analyze the long-term
effects of policies aimed at enhancing the economic participation rate of
female workers. Policies are classified as subsidy policies, which adjust the
effective wages of female workers by providing subsidies to households, and
structural improvement policies, which narrow the gender wage gap by
reducing discrimination of female workers in terms of promotion and
assignments.
With respect to adjusting effective wages by providing subsidies without any
structural improvement, it is found that providing subsidies conditioned on the
woman’s employment to households with young children, which have the
most difficulty in contributing to the labor supply throughout the life cycle, is
effective in increasing female participation in economic activities. The
implementation of this policy has heightened the average human capital level
of women by reducing career breaks. However, the policy has also resulted in
the employment of women with low productivity who would not have
participated in the labor market absent the subsidies, leading to a larger wage
gap between male and female workers.
If we wish to achieve, as policy goals, both an increase in female
participation in economic activities and a narrowing of the gender wage gap at
the same time, implementing only a subsidy policy has its limitation. Thus, it is
also necessary to engineer a structural improvement in the labor market that
will reduce the gender wage gap. Such improvements take a long time to take
root, and policy effects can be reduced in the process of forming a social
consensus. Taking these points into consideration, it may be a more realistic
alternative to pursue structural improvement in the labor market in parallel
with a policy of providing subsidies to households with young children on the
condition that the woman of the household is employed.