changes in gender wage gap in urban china during 1995-2007

8/2/2019 Changes in Gender Wage Gap in Urban China During 1995-2007

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Changes in Gender Wage Gapin U rban China During 1995-2007

LI ShiBeijing Normal University

SONG JinChinese Academy of Social Sciences

The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of the Asian

Development Bank (ADB), or its Board of Governors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequence of their use. The countries listed in this paper donot imply any view on ADB's part as to sovereignty or independent status or necessarily conform to ADB's terminology.


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Background

During the planning economyNarrowing gender wage gap was one of objectives of theChinese government, so gender wage gap was quite low

Economic Transition in ChinaReform from end of 1970sMore market power introduced into labor marketRising of gender wage gap


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Background

Two shocks in urban labor market

1. Economic reconstruction for urban enterprisesPrivatization of state-owned/ collective enterprises and

enlargement of private sectorChange of hiring/ firing employees and wage determination

2. Significant increase of migrant workers from ruralarea to urban The governments discouraging to encouraging migration

Huge change in labor supply in urban market


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Research Questions

1. Is there gender wage gap

2. How did it vary over time

3. What was the driving force behind

4. Who was influenced most


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Data Description

Data usedChinese Household Income Project Survey

(CHIPS)1995, 2002, 2007

Periods investigated1995-2002, 2002-2007

Observations concernedIndividual employees

Wage definition adoptedWage and salary, bonus and cash subsidies


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Data DescriptionLabor market general picture (Table 1)

1995 2002 2007

Labor force as percentageof all sampled individuals (%)

Total 71.6 74.6 74.8

Male 70.6 73.9 73.6

Female 72.6 75.3 76.0

Labor force participation (%) Total 80.9 74.3 75.0Male 86.3 81.9 83.2

Female 75.8 67.1 67.2

Unemployment rate (%)

Total 3.3 10.6 7.2

Male 2.9 8.3 5.2

Female 3.6 13.2 9.4

Self-employment rate (%)

Total 1.6 4.7 6.6

Male 1.6 4.9 6.9

Female 1.5 4.4 6.3


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Gender wage gap increasedGender wage ratio(female/male)

1. All sub-groups share thesame trend

grouped by age, minority,marriage status, educationlevel, ownership, occupation,industry, province

2. Sharper decrease in somegroupsless educated, private

sector and manual workers

1995 2002 2007

Total 0.84 0.82 0.74

Eastern 0.85 0.82 0.73Central 0.81 0.79 0.73

Western 0.86 0.85 0.81

0~20% 0.74 0.74 0.7020~40% 0.82 0.74 0.7040~60% 0.85 0.78 0.7360~80% 0.86 0.83 0.75

80~100% 0.85 0.87 0.75

By wage group

By region


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Methodology

Explain Wage Income Variables include: gender , age group, marriage status,

minority status, education level, ownership, occupation,

industry, province, year dummy

Gap between groups (Blinder/Oaxaca, 1973)Y m,t Y f,t = f,t ( X m,t X f,t ) + X m,t ( m,t f,t)

differences caused bypersonal and employment

characteristics between m/f

differences caused by thepayoff to the same

characteristics between m/fDiscrimination !


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Methodology --Decomposition

Gap between groups Y t = Y m,t Y f,t

Gap over time Y t+1 Y t = m,t ( X t+1 X t ) + X t+1 ( m,t+1 m,t)

+X f,t

(t+1

t) +

t+1( X

f,t+1 X

f,t)

change in genderendowments gap

between time points

change in payoff systemsbetween time points

change in endowmentsgaps between time points

change in gender payoffgap between time pointsTrend of

Discrimination !


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Results Table 3 Regression on wage

Male is given privileged wage. The privilege isgrowing.

Analyzing wage determination separately, we findthat the labor market pays differently to man andwomans same endowments.

1995 2002 2007 Pooled sample Male 0.10** 0.16** 0.26** 0.17**

(t value) -10.2 -12.0 -20.9 -24.4

Observations 10777 8657 9979 29413

R-squared 0.37 0.35 0.43 0.54


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ResultsTable 4 Oaxaca decomposition of wage

Two significant findings

1. Total gender wage gap is increasing;

2. The proportion caused by market discriminationis increasing.

Estimated Ln Wage 1995 2002 2007

Raw differential(between male and female)

19.5 24.1 32.0

Discrimination % 52.0% 69.0% 77.7%


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Results Table 5 Contribution of the variables

Working experience does not contribute to gender wagegap any more.

Ownership is an increasingly important factor.

Contribution of Each Variable toGender Wage Gap 1995 2002 2007

Age 15 2.9 -26.5

Marriage 8.8 8.4 7.7

Minority 0.2 -0.7 -0.1

Education -5.7 -12.7 -4.3

Ownership 0.1 2.3 15.9 Occupation -0.9 -0.2 -2.3

Industry -1.9 5.8 1.8

Province -3.4 -5.2 -2.4

Constant 7.3 23.6 41.9

Total Ln Wage Gap between m/f 19.5 24.2 32


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Results Table 6 Quantile Decomposition

Gender wage gap is all increasing The gap is smaller in high income group than the low The high income women were comparatively more

discriminated but it is much improved now

Estimated Ln Wage Differenceacross wage groups 10th 25th 50th 75th 90th

Raw differential

1995 22.4 18.7 17.5 16.7 17.2

2002 29.2 26.6 23.4 22.0 18.1

2007 35.2 34.0 33.0 31.0 28.2

Discriminationproportion (%)

1995 45.1 47.6 49.7 50.3 55.22002 66.4 68.0 66.2 66.4 63.0

2007 79.3 80.3 78.2 73.2 72.7


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Results Table 7 Decomposition for gap change in 95-02

From 1995 to 2002, the gender wage gap in enlarging.It is mainly due to the change of personal endowmentand the increasing of return difference to the sameendowment of men and women.

Yt+1 Yt bm,t (Xt+1 Xt) Xt+1 (b m,t+1 bm,t) Xf,t(b t+1 b t) b t+1 (Xf,t+1 Xf,t)

Variables Total (1) (2) (3) (4) Age group -0.124 0.007 -0.021 -0.109 -0.001

Marriage Status -0.003 0.006 -0.001 -0.007 -0.002

Minority -0.009 0.000 0.000 -0.009 0.000

Education level -0.071 -0.012 0.005 -0.046 -0.019

Ownership 0.023 -0.005 -0.001 0.011 0.018

Occupation

0.008 0.003 0.019 -0.014 0.000Industry 0.076 0.004 -0.007 0.050 0.030

Province -0.017 -0.013 0.002 -0.011 0.006

Constant 0.162 0.000 0.000 0.162 0.000

Sum 0.05 -0.009 -0.004 0.027 0.031

Percentage 100.0 % -20.3 % -9.8 % 60.3 % 69.7 %


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Results Table 8 Decomposition for gap change in 02-07

From 2002 to 2007, the gap increased more rapidly. Butthis time, the enlarging is greatly explained by the returndifference to the endowment between genders and thechange of wage determination system.

Yt+1 Yt bm,t (Xt+1 Xt) Xt+1(b m,t+1 bm,t ) Xf,t(b t+1 b t) b t+1 (Xf,t+1 Xf,t)

Variables Total (1) (2) (3) (4) Age group -0.293 -0.003 -0.004 -0.283 -0.003

Marriage Status -0.006 -0.001 0.002 -0.006 0.000

Minority 0.006 * 0.000 0.000 0.006 0.000

Education Group 0.085 * -0.010 0.000 0.100 -0.005

Ownership 0.135 * 0.003 0.016 0.119 -0.004

Occupation -0.022 # -0.039 0.000 0.005 0.013

Industry -0.041 # -0.005 0.021 -0.062 0.005

Province 0.027 * 0.008 0.004 0.016 0.000

Constant 0.183 * 0.000 0.000 0.183 0.000

Sum 0.08 -0.047 0.039 0.078 0.005

Percentage 100.0 % -63.5 % 52.3 % 104.1 % 7.1 %


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Conclusion

1. The gender wage gap has been increasing during theperiod we observe and the increasing is even more rapidin very recent years.2. It is mainly caused by the rising discrimination tofemale in the labor market and the wage determinationsystem is unfavorable for women.3. Women in low income group are suffering a biggerwage gap and more discrimination.

Possible Explanation:

Inflow of unskilled rural migrant workers?


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Thank you !

changes in gender wage gap in urban china during 1995-2007

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