Female Workers and Firms’ Productivity and Wages

While it is generally agreed that reducing the gender wage gap is desirable, different policy measures would be effective in addressing the problem, depending on what causes the gap. This study measures the relationships between firms’ compositions of workers, productivity, and wages―the “productivity-wage gap†―using panel data from 2015 to 2021 constructed from an original survey of Japanese firms linked with the Basic Survey of Japanese Business Structure and Activities. These results indicate that, on average, female workers’ wages are not lower than their contributions to firm productivity. Second, we do not find female workers’ wages to be higher than productivity in firms with labor unions and female directors on their boards. Third, part-time workers’ wages are higher relative to their productivity levels. Fourth, the wages of highly educated workers are lower relative to their productivity levels. Fifth, when firm fixed effects are controlled for, the productivity-wage gap for female workers and highly educated workers cannot be precisely estimated, indicating that unobserved firm characteristics are behind the gap observed cross-sectionally.