New insights into trends and reasons for the gender pay gap in Urban China, 1988-2013

Abstract

ABSTRACT This study documents long-run trends of the gender pay gap (GPG) in urban China 1988–2013 using the Chinese Household Income Project microdata. We find a fluctuating and enlarging GPG over time. The average ratio of female to male earnings fell from 85.2% to 79.9%. Analysis by earnings percentiles shows that the GPG is larger at the bottom of the earnings distribution than it is at the top. We utilize OLS regressions, Blinder-Oaxaca decomposition, and Juhn-Murphy-Pierce decomposition to make a comprehensive analysis of the contributing factors to the GPG. By 2013, conventional human capital variables explained little of the GPG. Gender differences in location (ownership, occupation, and industry) were important, although the magnitude of the effect of three factors has changed over time. Gender differences in job characteristics (contract type and firm size) are also important in explaining the GPG. The increases in the unexplained gap contributed to the divergence of the gender gap. Analysis by sub-periods shows that there were distinctive patterns behind the changes of the GPG. The main contributors to the diverging trend of the GPG were changes in the wage structure to women and women’s disadvantages in unobserved skills.