Giving Compass' Take:

• Jay Shambaugh, Ryan Nunn, and Becca Portman explain how the United States can take lessons from the rise of women workers in Japan to increase women’s labor force participation.

• What does women’s labor force participation look like in your area? What companies and organizations are already working to increase participation? 

• Learn about closing the gender wage gap. 

After decades of steady gains, U.S. women’s labor force participation peaked in 2000. In retrospect, this was an important turning point: rising women’s participation had fueled household income and economic growth, and helped offset declining prime-age male labor force participation. Declining prime-age women’s participation since then has weakened growth, exacerbating the labor force participation decline stemming from an aging population. With fewer workers contributing to the economy, economic growth and improvement in living standards have been weaker than they otherwise would have been.

Understanding the U.S. decline in prime-age women’s participation is therefore an urgent concern. In this economic analysis, we seek to learn from a labor market that has been on an entirely different trajectory from that of the United States, and a country that has made women’s labor force participation a top macroeconomic priority. After lagging behind U.S. women for more than forty years, Japanese prime-age women have now caught up and exceeded the U.S. rate of labor force participation (defined as the fraction of the population either working or searching for work). In 2000, Japan’s prime-age female labor force participation rate was just 66.5 percent, below the OECD average and a full 10 percentage points below the U.S. level. Since that time, the U.S. rate trended down to 74.3 percent in 2016 while the Japanese rate has risen to 76.3 percent.

Holding constant the quality of women’s jobs, the economic impact of changes in women’s labor force participation is potentially very large. If U.S. prime-age women had gained as much ground from 2000 to 2016 as their Japanese counterparts, one simple calculation suggests that GDP in the United States would have been around $800 billion (over 4%) higher in 2016 than it actually was, increasing GDP per person by nearly $2,500. To the extent that well-designed policies can remove impediments to women’s labor force participation, they will yield important benefits for the economy as a whole.

Read the full article about what we can learn from the Japanese women's labor force by Jay Shambaugh, Ryan Nunn, and Becca Portman at Brookings.