Working women are playing a bigger role in Japan than Goldman Sachs Group Inc.'s Kathy Matsui thought possible when she penned her first report on womenomics in 1999. Yet the country needs to pick up the pace of change or risk being overtaken by a demographic crisis.

Two decades ago, Matsui struck an optimistic note amid general gloom over Japan in her first analysis of women in the economy, setting out how empowered women could bolster flagging growth as the population aged.

In a new version out earlier this month, Matsui, now chief Japan strategist, explains how Japanese women continue to trail their peers in other developed countries in many respects, even as they pour into the labor force in ever-increasing numbers. There are now 3 million more women working outside the home than in 2012, yet they earn on average only three-quarters as much as men, partly because so many are in part-time roles.