Earnings of Married Women in Hong Kong in 1996and 2006:

Labor Force Participation, Domestic Helper, and College Premium

Hongbo Wang and Raymond Sin-kwok Wong

Hong Kong University of Science and Technology

Abstract

Research on returns to schooling for married women is relatively scarce in existing sociological
and economic literature. This scarcity possibly reflects not only the perception of married women as the
“reserve labor” for the economy, but also well-known complexities entailed in understanding married
women’s labor market performance. Comparing to single women as well as men, married women are
generally less committed to the labor market on account of distinct family role constraints, such as child-
care and household chores. As the sample selection bias thesis states, married women do not randomly
opt to participate in the labor force. Therefore, observed schooling differentials in earnings among
working married women ought to be interpreted with great caution in that, without proper correction for
selectivity bias, estimated economic returns to human capital may not readily be applicable to married
women who stay home as housewives.

The present study contributes to this body of literature by considering the unique case of Hong
Kong. Specifically, we estimate appropriate earning equations for married women and compare their
returns to college degree in 1996 and 2006. We also corrected for possibly shifting selectivity of
working married women. With respect to the selection process, we focus on the role played by family
role constraints and foreign domestic helper in married women’s labor force participation.

Hong Kong has undergone far-reaching social, economic, and political changes since the mid-
1990s, including the restoration of its sovereignty to the People’s Republic of China in 1997. The
financial crisis occurring immediately after the handover drove the economy into a prolonged recession
until 2003 and put an end to an extended period of economic prosperity and full employment since mid-
1980s. The unemployment rate has remained relatively high since then. Other noticeable changes
include a deepening transformation of the economy towards a highly service-oriented one, rising
demand for college degrees, and the implementation of Sex Discrimination Ordinance (SDO) in 1995
and a series of other anti-discrimination legislation. Considering that women have also benefited from
the expansion of higher education due to more egalitarian access, all aforementioned changes seem to
suggest an increased underlying college premium for married women after 1997. Yet it remains an
empirical question whether married women with college degree were actually better off in the post-1997
labor market conditions.

We need to account for the self-selection of married women into the labor force in order to
estimate the “unbiased” returns to schooling based on observed earnings of married women who are
currently working. Regarding female labor force participation, Hong Kong stands out to be a unique
hybrid of patriarchal traditions and laissez-faire capitalism. Today women are still responsible for most
of the domestic duties within the household, with family role constrains remaining rigid especially for
those with children. The government has refrained from committing itself to no more than minimum
support of social welfare in the case of, for instance, child care and kindergarten subsidies. It thus
appears that a viable route for many married women who wish to seek regular employment is through
labor substitution for their housewife role rather than reallocation of labor between the couple in the
household. We therefore argue that any increase in the support of childcare may serve to increase
married women’s labor supply. The large influx of foreign domestic helpers since the late 1970s should
therefore command special attention in this important regard.

Our study draws on two 5% samples from the 1996 and 2006 Hong Kong population by-censuses.
We first define our analytical samples by a battery of restrictions. Married women included in our
sample are (1) ethnic Chinese, (2) aged 25 to 64, (3) either wage-earning employees or out of labor
force, and (4) not missing on husband and children information. Our analytical strategy is to estimate a
sequence of Mincerian earnings equations and compare estimates between 1996 and 2006. We allow for
non-linear rather than linear, constant returns to schooling, focusing on college premium. The final
model accommodates potential work experienced discounted by number of children and corrects for
sample selection bias through Heckman correction. For the selection process, we consider the effects of
family role constraints (particularly motherhood) and presence of domestic helper in household,
alongside other commonly known factors.

Our results indicate that regardless of specification, all earning equations point out to a relatively
high premium for college education. There are unambiguous signs of increase in college premium
between 1996 and 2006. Overall, a married woman with college education is likely to earn 3 or more
time than what a primary-school educated counterpart can get. Clearly, non-linear educational gradients
in earnings are at odds with the constant return to schooling assumption. Our estimates provide
supportive evidence for an emphasis on income inequality between college graduates and those without
a college degree.

Results from both 1996 and 2006 data suggest that, while estimating earnings equation on married
women, sample selection bias tends to be modest, but not trivial. Sample selection models help us better
understand that married women’s labor supply and earnings as two entangled processes. Parallel to the
findings as to economic return to human capital, we also found that married women with more human
capital are less likely to go to work in 2006 than in 1996, among other things. More interestingly,
family role constraints are found to impose significantly negative impacts on wife’s decision on labor
supply. In contrast, various support for married women helps them free of maternal duties and
household chores. As we expected, availability of low-paid foreign domestic helper in the household is
associated with sharply increased likelihood labor force participation among married women. It is worth
pointing out that the magnitude of the domestic helper effect is remarkable. This finding is against
previous skepticism that “the availability of Filipino domestic helper freed middle-class women from the
routine domestic labor, but this has done little, if at all, to change the traditional structure of the family
or workplace.”

Keywords
Married Women, Hong Kong, Labor Force Participation, Earnings Equation

A brief bio
Hongbo Wang is a Visiting Scholar in the Social Science Division of Hong Kong University of Science
and Technology. Raymond Sin-Kwok Wong is Professor of the Social Science Division of Hong Kong
University of Science and Technology.