On the Distributional Effect of Japan’s Equal Employment Opportunity Act on the Gender Wage Gap

Abstract

This research evaluates the distributional impact of the Japanese Equal Employment Opportunity Act (EEOA). It employs the methodology based in quantile regressions by Melly (2005) to decompose the gender wage gap at several quantiles for cohorts that entered the labor market around the time the EEOA came into effect in 1986. The data used in the main analysis comes from the Employment Status Survey of 1997 and 2002, and the robustness of the results is evaluated employing 2002 and 2007 data. The results show that the gender wage gap shrunk at the lowest income quantiles, mostly due to an improvement in the relative return to characteristics of women. Important changes in the educational level of male workers are observed, which are believed to be a response to the increased competition by better-educated women in managerial positions, and to shifts in the marriage market. An examination by sample segments shows that the largest fluctuations in the wage gap across all quantiles are observed among high school graduates and regular workers. Although the conclusions are robust, the contributions of the different components of the decomposition are affected by the point in time in which cohorts are observed.