Poster #98 - Pay Transparency and the Gender Wage Gap: Evidence from Subnational Implementation Heterogeneity in Japan

• In Event: Friday Poster Reception

Abstract

Can “soft law” disclosure policies reduce gender wage inequality? In recent years, many governments have introduced pay transparency policies to address persistent gender wage gaps, yet evidence on their effectiveness remains limited. This paper examines Japan’s 2022 mandatory pay transparency policy, which requires firms with 301 or more employees to publicly disclose gender wage gap statistics. Unlike many regulatory interventions, the policy operates under a soft-law framework without monetary penalties, relying instead on reputational incentives and public scrutiny to influence firm behavior. Although the policy was implemented nationwide, compliance varied substantially across prefectures due to differences in administrative guidance and enforcement practices by local labor bureaus. This variation generated meaningful subnational differences in disclosure intensity, creating a natural setting to study the policy’s impact. I exploit this regional variation as plausibly exogenous and estimate the effects of disclosure on gender wage inequality using prefecture-by-industry-by-age aggregate data from the Basic Survey on Wage Structure. The empirical analysis employs a fixed-effects framework that controls for region, industry, and demographic characteristics. The results indicate that higher disclosure rates significantly reduced the gender wage gap in base pay. Specifically, a one-unit increase in disclosure intensity is associated with a reduction of 0.046 log points in the gender wage gap, corresponding to approximately 17.9 percent of the pre-policy gap. Importantly, the decline in the wage gap occurs through faster wage growth for women rather than reductions in male wages, suggesting that transparency policies can improve equity without harming overall wage levels. The effects are particularly pronounced in non-manufacturing industries, where labor markets are often more flexible and reputational incentives may play a larger role. Overall, the findings provide new evidence on the effectiveness of information-based regulation in reducing gender inequality. By highlighting how soft-law disclosure policies can influence labor market outcomes through reputational mechanisms, this study contributes to ongoing policy debates about transparency, corporate accountability, and gender equity in labor markets.

Author

• Ryuto Nishimura, Boston University
  Presenting Author