A New Growth Engine for Japan: Women in STEM Fields; Japan

ANewGrowthEngineforJapan:WomeninSTEMFields Japan RuiXu SIP/2023/030 IMFSelectedIssuesPapersarepreparedbyIMFstaffasbackgrounddocumentationforperiodicconsultationswithmembercountries.ItisbasedontheinformationavailableatthetimeitwascompletedinMarch2023.ThispaperisalsopublishedseparatelyasIMFCountryReportNo23/128. 2023 MAY ©2023InternationalMonetaryFundSIP/2023/030 IMFSelectedIssuesPaper AsiaandPacificDepartment ANewGrowthEngineforJapan:WomeninSTEMFieldsPreparedbyRuiXu AuthorizedfordistributionbyRanilSalgadoMay2023 IMFSelectedIssuesPapersarepreparedbyIMFstaffasbackgrounddocumentationforperiodicconsultationswithmembercountries.ItisbasedontheinformationavailableatthetimeitwascompletedinMarch2023.ThispaperisalsopublishedseparatelyasIMFCountryReportNo23/128. ABSTRACT:Despiterecentimprovementsinfemalelaborforceparticipation,womenremainunder-representedinSTEMfieldsinJapan.GiventhecloselinkbetweenSTEMworkersandinnovation,encouragingwomentopursueSTEMcareerscouldboostgrowthpotential.UsingacalibratedendogenousgrowthmodelwithSTEMtalent,thispaperquantifiesthepotentialgainsfromeliminatingbarrierstoSTEMfieldsamongwomen.ThefindingssuggestthatbridgingthegendergapinSTEMfieldscanboostTFPgrowthby20percentandconsumption-equivalentwelfareby4percentinJapan. RECOMMENDEDCITATION:Xu,Rui.2023.“ANewGrowthEngineforJapan:WomeninSTEMFields.”IMFSelectedIssuesPaper(SIP/2023/030).Washington,D.C.:InternationalMonetaryFund. JELClassificationNumbers: O31,O34,O41,J71,J78 Keywords: STEMworkers,women,endogenousgrowth,heterogenoustalent,innovation,TFPgrowth,consumption-equivalentwelfare,Japan. Author’sE-MailAddress: RXu@imf.org SELECTEDISSUESPAPERS ANewGrowthEngineforJapan:WomeninSTEMFields Japan PreparedbyRuiXu1 1TheauthorwouldliketothanktheJapaneseauthoritiesforprovidinghelpfulcomments. March2023 JAPAN SELECTEDISSUES PreparedByRuiXu. ApprovedBy AsiaandPacificDepartment CONTENTS ANEWGROWTHENGINEFORJAPAN:WOMENINSTEMFIELDS2 A.Introduction2 B.AnEndogenousGrowthModelwithSTEMTalent3 C.Results5 D.PolicyImplications6 BOXES 1.ModelSetup9 2.Consumption-equivalentWelfare10 FIGURES 1.WomeninLaborMarket3 2.BarrierstoFemaleSTEMWorkers8 TABLES 1.ParameterCalibration5 2.WelfareImpactofRemovingBarrierstoFemaleSTEMWorkers6References11 ANEWGROWTHENGINEFORJAPAN:WOMENINSTEMFIELDS1 A.Introduction 1.SinceAbenomics,morewomenhavejoinedthelaborforceamideconomicrecoveryandimprovedchildcaresupport.Thefemalelaborforceparticipationrateroseby10percentagepointsinthelast10years,approachingthehighestlevelamongG7countries.Theeducationlevelamongfemaleworkershasalsoimprovedsignificantly,suggestingthatnewfemaleworkersarebettereducated.Thisisinlinewiththesharpriseinfemaleuniversitystudentssince1990. 2.However,womenarestillseverelyunder-representedinSTEMfields.AmongG7countries,theshareofwomenenrolledinscience,technology,engineering,andmathematics(STEM)fieldsinuniversityisthelowestinJapanataround7percent.TheshareislikelyloweramongSTEMprofessionsaswomentendtodropoutthroughouttheirprofessionalcareer. 3.Inadditiontoexplicitgenderpaygaps,culturalbiasesandadverseworkingenvironmentsarediscouragingwomenfrompursuingSTEMcareers.Startingfromjuniorschool,science-relatedsubjectsarelesspopularamonggirlsthanamongboys.ThelowproportionsofwomeninSTEMfieldscanbeattributedtothreefactorsaccordingtoHommaetal.(2013):1)fewrolemodelsforyoungerwomen;2)unconsciousbiasamongmaleresearcherstowardsfemalecolleagues;and3)avoidingcompetitionandunderestimationofabilitybywomenthemselves.Thesefactorsarecompoundedbythesocialnormoflongworkinghoursandmandatorysocializingafterworkinamale-dominatedsociety.AccordingtotheGlassCeilingindexcompiledbyTheEconomistmagazine,Japanisthesecondworstintermsofenvironmentforworkingwomen.ThesegenderbiasesdiscouragewomenfromenteringSTEMfieldsandhurteconomicgrowthduetotalentmisallocation(seeHsiehetal.forarelatedstudyontheUnitedStates). 4.EncouragingmorewomentojoinSTEMfieldscouldhelpsparkinnovationandliftpotentialgrowthratesinanageingsociety.ThegrowtheconomicsliteraturehasestablishedthekeyroleofSTEMworkersasfundamentalinputsforinnovationandthemaindriverofproductivitygrowth(seeGriliches1992andJones1995).InnovationseemstobeslowinginJapan,withpatentgrantsdecliningsince2012.Asthelaborforcecontinuestoageandlaborforceparticipationoffemaleandseniorworkerspeaks,theonlywaytoboostpotentialgrowthistoimprovetotalfactorproductivitythroughtechnologicalprogress.TappingintotheunderutilizedtalentoffemaleworkersisoneofthemostpromisinggrowthenginesforJapan. 5.ThispaperquantifiesthepotentialgainsfromeliminatingbarrierstoSTEMfieldsamongwomen.UsinganendogenousgrowthmodelwithSTEMtalent,thispaperfindsthat 1PreparedbyRuiXu(APD). 2INTERNATIONALMONETARYFUND bridgingthegendergapinSTEMfieldscanencouragemorewomentojointheSTEMfieldsandboosttheTFPgrowthby20percent. Figure1.Japan:WomeninLaborMarket B.AnEndogenousGrowthModelwithSTEMTalent 6.Asinastandardendogenousgrowthmodel,growthisdrivenbyresearchconductedbyfirmsthatareundermonopolisticcompetition.Whilefinalgoodsproducersmakenoprofitunderperfectcompetition,theintermediate