No.60, Urban China’s Gender Wage Gap: New Directions?

Song, Jin; Sicular, Terry; Gustafsson, Bjorn
Published: 2016/11/30 21:30:28    Updated time: 2016/11/30 21:30:28

Abstract: Past studies of the gender wage gap in urban China have found that since the 1980s the gap between men and women’s wage earnings has progressively widened. Using data from the CHIP urban household surveys for the years 1995, 2002, 2007 and 2013, we provide consistent estimates of the gender wage gap in urban China and investigate factors contributing to that gap. From 1995 to 2007 we find a substantial, progressive widening of the gap. From 2007 to 2013 we find that the gender wage gap took a new direction and narrowed. We discuss the gender wage gap in relation to structural changes in the urban economy and life cycle events, as well as government policies that affect women and men differentially. Oaxaca-Blinder decompositions reveal that the contribution of differences in characteristics between men and women to the wage gap had declined over time and, as of 2013 the gap was almost entirely unexplained. We investigate key factors underlying the gender wage gap in recent years, specifically, the relationships between wage earnings of women versus men and sector of employment as well as individual characteristics such as age, education, marriage and children.
Keywords: Urban China; Gender Wage Gap;

Authors:

Song, Jin (Institute of World Economics and Politics, Chinese Academy of Social Sciences)

Terry Sicular (Department of Economics, University of Western Ontario)

Björn Gustafsson (Department of Social Work, University of Gothenburg)

I. Introduction

Past studies of the gender wage gap in urban China have found that since the 1980s the gap between men and women’s wage earnings has progressively widened. The widening gender wage gap is not entirely surprising, as during this time frame China made the transition from a planned economy with an egalitarian wage structure to a predominately market-driven system with considerable wage differentiation. Using data from CHIP 2013, we find a reversal in this trend. As measured by the percentage difference between the mean female and mean male wages, the gender wage gap declined from 29% in 2007 to 25% in 2013. After controlling for age, education, marital status, ownership of work unit, occupation, production sector, and other characteristics, the gap is smaller but the decline is similar, from 22% in 2007 to 19% in 2013. Although the extent of the decline is modest, it represents a new direction of change and hints at possible trends in the future.

In this paper our focus is on the most recent years during which the gender wage gap narrowed, but we also document and discuss longer-term trends in the urban gender wage gap from 1995 through 2013. For reasons of comparability over time and to the literature, we restrict our analysis to formal urban residents. Using data from the CHIP urban household survey for the years 1995, 2002, 2007 and 2013, we estimate the size of the gender wage gap with and without controls for characteristics; in addition, we conduct a Oaxaca-Blinder decomposition to identify the extent to which the gap is explained by differences in the characteristics of women and men versus unexplained. For 2007 and 2013 we carry out additional analysis to investigate key factors underlying the recent narrowing of the gap. Specifically, we examine relationships between wage earnings and characteristics of the employer such as ownership and production sector, and between wage earnings and characteristics of the individual such as age, education, marriage and children.

Our work builds on a fairly large literature about the gender wage gap in urban China (recent studies include Li and Song 2013, Liu 2011, and Xiu and Gunderson 2013). We contribute to the literature in several ways. First, we provide in one place a set of consistent estimates of the gender wage gap from 1995 through 2013, which provides a long-term perspective. Second, using the CHIP 2013 data we update the literature and find the change in the direction of the gender wage gap. Third, we provide new evidence on factors underlying changes in the gender wage gap, including age, education and life events such as marriage and children, the last of which have been the subject of some interesting recent research (Jia and Dong 2013, Qi and Dong 2016, Zhang and Hannum 2015).

Although differences in labor force participation are not the focus of this paper, we recognize that the gender wage gap cannot be entirely disentangled from the question of who chooses to work (see Chi and Li 2014 for some discussion of this in the Chinese context). In our analysis of the wage gap we to some extent sidestep this selection problem by restricting our sample to workers ages 25 through 49, thus removing from the analysis those younger and older individuals who are choosing when to enter and leave the labor force. Nevertheless, as background we present some statistics on female and male labor force participation for a broader age range (16-60). In the prime working age range 25-49, which is the focus of our gender wage gap analysis, labor force participation is high for both women and men, although higher for men. More in-depth discussion of labor force participation using the CHIP data from 2013 and earlier years is provided by another paper in this collection (see Xu and Li 2016), as well as elsewhere in the literature (e.g., Hare 2016).

The wages of women and men are, of course, related to broad shifts in China’s urban labor market as well as government labor policies. We therefore begin in Section II with an overview of recent changes in the structure of labor demand and supply in urban China and of major policy measures relevant to gender wage differences. In Section III we introduce the data, present descriptive statistics, and discuss patterns of employment and of the gender wage gap. Section IV explains our empirical methods. Sections V and VI report findings from the wage regressions and Oaxaca decompositions. We conclude with discussion of our key findings and their implications.