C hanges in Gender Wage Gap in U rban C hina During 19952007

LI Shi Beijing Normal University SONG Jin Chinese 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 do not imply any view on ADB's part as to sovereignty or independent status or necessarily conform to ADB's terminology.

Background

During the planning economy

Narrowing gender wage gap was one of objectives of the Chinese government, so gender wage gap was quite low

Economic Transition in China

Reform from end of 1970s More market power introduced into labor market Rising of gender wage gap

Background
Two shocks in urban labor market
1. Economic reconstruction for urban enterprises
Privatization of state-owned/ collective enterprises and enlargement of private sector Change of hiring/ firing employees and wage determination

2. Significant increase of migrant workers from rural area to urban

The governments discouraging to encouraging migration Huge change in labor supply in urban market

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

Data Description

Data used
Chinese Household Income Project Survey (CHIPS) 1995, 2002, 2007

Periods investigated
1995-2002, 2002-2007

Observations concerned
Individual employees

Wage definition adopted

Wage and salary, bonus and cash subsidies

Data Description
Labor market general picture (Table 1)
1995 Total Labor force as percentage of all sampled individuals (%) Male Female Total Labor force participation (%) Male 71.6 70.6 72.6 80.9 86.3 2002 74.6 73.9 75.3 74.3 81.9 2007 74.8 73.6 76.0 75.0 83.2

Female
Total

75.8
3.3

67.1
10.6

67.2
7.2

Unemployment rate (%)

Male
Female Total

2.9
3.6 1.6 1.6 1.5

8.3
13.2 4.7 4.9 4.4

5.2
9.4 6.6 6.9 6.3

Self-employment rate (%)

Male Female

Gender wage gap increased

Gender wage ratio (female/male)

1995 2002
0.82 0.82 0.79 0.85 0.74 0.74 0.78 0.83 0.87

2007
0.74 0.73 0.73 0.81 0.70 0.70 0.73 0.75 0.75

Total 0.84 By region Eastern 0.85 Central 0.81 Western 0.86 By wage group 0~20% 0.74 20~40% 0.82 40~60% 0.85 60~80% 0.86 80~100% 0.85

1. All sub-groups share the same trend

grouped by age, minority, marriage status, education level, ownership, occupation, industry, province 2. Sharper decrease in some groups less educated, private sector and manual workers

Methodology

Explain Wage Income

minority status, education level, ownership, occupation,
industry, province, year dummy
differences caused by personal and employment characteristics between m/f differences caused by the payoff to the same Discrimination ! characteristics between m/f

Variables include: gender, age group, marriage status,

Gap between groups (Blinder/Oaxaca, 1973)

Ym,t Yf,t = f,t ( Xm,t Xf,t ) + Xm,t ( m,t f,t)

Methodology

--Decomposition

Gap between groups

Yt = Ym,t Yf,t
change in gender endowments gap between time points change in payoff systems between time points

Gap over time

Yt+1 Yt = m,t ( Xt+1 Xt ) + Xt+1 ( m,t+1 m,t) +Xf,t (t+1 t) + t+1 ( Xf,t+1 Xf,t )
change in gender payoff Trend of gap between time points Discrimination ! change in endowments gaps between time points

Results
1995
Male (t value) 0.10** -10.2

Table 3 Regression on wage

2002
0.16** -12.0

2007
0.26** -20.9

Pooled sample
0.17** -24.4

Observations
R-squared

10777
0.37

8657
0.35

9979
0.43

29413
0.54

Male is given privileged wage. The privilege is growing. Analyzing wage determination separately, we find that the labor market pays differently to man and womans same endowments.

Results
Estimated Ln Wage Raw differential
(between male and female)

Table 4 Oaxaca decomposition of wage

1995
19.5

2002
24.1

2007
32.0

Discrimination %

52.0%

69.0%

77.7%

Two significant findings

1. Total gender wage gap is increasing;
2. The proportion caused by market discrimination is increasing.

Results
Age Marriage Minority Education Ownership Occupation Industry Province Constant

Table 5 Contribution of the variables

1995
15 8.8 0.2 -5.7 0.1 -0.9 -1.9 -3.4 7.3 19.5

Contribution of Each Variable to Gender Wage Gap

2002
2.9 8.4 -0.7 -12.7 2.3 -0.2 5.8 -5.2 23.6 24.2

2007
-26.5 7.7 -0.1 -4.3 15.9 -2.3 1.8 -2.4 41.9 32

Total Ln Wage Gap between m/f

Working experience does not contribute to gender wage gap any more. Ownership is an increasingly important factor.

Results
Estimated Ln Wage Difference across wage groups 1995 Raw differential 2002 2007 1995

Table 6 Quantile Decomposition

10th
22.4 29.2 35.2 45.1 66.4 79.3

25th
18.7 26.6 34.0 47.6 68.0 80.3

50th
17.5 23.4 33.0 49.7 66.2 78.2

75th
16.7 22.0 31.0 50.3 66.4 73.2

90th
17.2 18.1 28.2 55.2 63.0 72.7

Discrimination proportion (%)

2002 2007

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

Results Table 7 Decomposition for gap change in 95-02

Yt+1Yt
Variables Total

bm,t(Xt+1Xt)
(1)

Xt+1(bm,t+1bm,t)
(2)

Xf,t(bt+1bt)
(3)

bt+1(Xf,t+1Xf,t)
(4)

Age group
Marriage Status Minority Education level Ownership Occupation Industry

-0.124
-0.003 -0.009 -0.071 0.023 0.008 0.076

0.007
0.006 0.000 -0.012 -0.005 0.003 0.004

-0.021
-0.001 0.000 0.005 -0.001 0.019 -0.007

-0.109
-0.007 -0.009 -0.046 0.011 -0.014 0.050

-0.001
-0.002 0.000 -0.019 0.018 0.000 0.030

Province
Constant Sum Percentage

-0.017
0.162 0.05 100.0 %

-0.013
0.000 -0.009 -20.3 %

0.002
0.000 -0.004 -9.8 %

-0.011
0.162 0.027 60.3 %

0.006
0.000 0.031 69.7 %

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

Results Table 8 Decomposition for gap change in 02-07

Yt+1Yt Variables Age group Marriage Status Minority Education Group Ownership Occupation Industry Province Constant Sum Percentage Total -0.293 -0.006 0.006 * 0.085 * 0.135 * -0.022 # -0.041 # 0.027 * 0.183 * 0.08 100.0 % bm,t(Xt+1Xt) (1) -0.003 -0.001 0.000 -0.010 0.003 -0.039 -0.005 0.008 0.000 -0.047 -63.5 % Xt+1(bm,t+1bm,t) (2) -0.004 0.002 0.000 0.000 0.016 0.000 0.021 0.004 0.000 0.039 52.3 % Xf,t(bt+1bt) (3) -0.283 -0.006 0.006 0.100 0.119 0.005 -0.062 0.016 0.183 0.078 104.1 % bt+1(Xf,t+1Xf,t) (4) -0.003 0.000 0.000 -0.005 -0.004 0.013 0.005 0.000 0.000 0.005 7.1 %

From 2002 to 2007, the gap increased more rapidly. But this time, the enlarging is greatly explained by the return difference to the endowment between genders and the change of wage determination system.

C onclusion

1. The gender wage gap has been increasing during the period we observe and the increasing is even more rapid in very recent years. 2. It is mainly caused by the rising discrimination to female in the labor market and the wage determination system is unfavorable for women. 3. Women in low income group are suffering a bigger wage gap and more discrimination.

Possible Explanation:

Inflow of unskilled rural migrant workers?

Thank you !