Chinese Household Income Project Survey Research Articles

Double negative effects on the wages of ethnic minority women: evidence from China

ABSTRACT Using data from the Chinese Household Income Project surveys of 2002, 2013, and 2018 and employing decomposition methods, this study is the first to examine the impact of the double negative effect on the wages of ethnic minority women in urban China. Three key conclusions emerge. First, the results indicate the presence of a double negative effect, with the gender wage gap effect being more pronounced than the ethnicity wage gap effect. This suggests that discrimination against women is the primary factor contributing to the formation of the wage gaps. Second, the decomposition results on wage distribution suggest that the return effect on both ethnicity and gender wage gaps is greater for the high-wage group than for the low- and medium-wage groups, suggesting workplace discrimination may be much more severe for the high-wage group. Third, the wage gaps and determinants of their formation differ by heterogenous ethnic minority groups.

Estimating the Complier Average Causal Effect with Non-Ignorable Missing Outcomes Using Likelihood Analysis

Missing data problems arise in randomized trials, which complicates the inference of causal effects if the missing mechanism is non-ignorable. We tackle the challenge of identifying and estimating the complier average causal effect parameters under non-ignorable missingness by increasing the covariates to mitigate the sensitivity to the violation of specific identification assumptions. The missing data mechanism is assumed to follow a logistic model, wherein the absence of the outcome is explained by the outcome itself, the treatment received, and the covariates. We establish the identifiability of the models under mild conditions by assuming that the outcome follows a normal distribution. We develop a computational method to estimate model parameters through a two-step likelihood estimation approach, employing subgroup analysis. The bootstrap method is employed for variance estimation, and the effectiveness of our approach is confirmed through simulation. We applied the proposed method to analyze the household income dataset from the Chinese Household Income Project Survey 2013.

Intergenerational Mobility and Inequality in China: Evidence from the Chinese Household Income Project

We document intergenerational mobility in the income distribution in China, using Chinese Household Income Project survey data from the 1990s till 2013. To obtain a robust picture of mobility, we use several measures of mobility: from the most commonly used intergenerational income elasticity to the innovative rank mobility measures. We then estimate quantile regressions to capture variation along the income distribution. Conclusively, our results suggest higher dependence of children’s income on parental income for lower income generational pairs, indicating challenges to promote upward mobility and reducing inequality.

Effects of the Resident Basic Medical Insurance Reform on Household Consumption in China

AbstractThis paper investigates the causal relationship between the Urban and Rural Resident Basic Medical Insurance (URRBMI) reform and household consumption in urban China using data from the Chinese Household Income Project survey and employing combination of the propensity score matching and difference‐in‐differences methods. The results yield three conclusions. First, the reform affected both the amount and share of household consumption. Specifically, the reform led to an increase in total household consumption, encompassing both medical and nonmedical expenditures. Among these, the proportion of medical consumption increased, while the proportion of nonmedical consumption reduced. Second, the impact of the URRBMI reform varied across consumption categories within nonmedical expenditure. Specifically, consumption for education and entertainment industries are positively impacted by the URRBMI reform in terms of both quantity and proportion. Third, low‐income households benefit more from the URRBMI reform compared to middle‐ and high‐income households. The main channels through which the URRBMI reform affects household consumption were the price effect and the crowding out effect on precautionary savings.

Political background and its influences on wage gaps: Evidence from China

Using the data from the Chinese Household Income Project Survey and the decomposition method, this study investigates the determinants of the wage gap between members and non-members of the Communist Party of China (CPC) from 2002–2018. There were three new findings. First, the endowment difference component (especially education) is the main contributing factor to the wage gap between CPC members and non-members in 2002, 2013, and 2018. Second, the discrimination against CPC non-members decreased, whereas that of human capital increased from 2002 to 2018. Third, the endowment difference in the wage gap is greater for workers in SOEs than for non-SOEs during 2002–2018. The results indicate that most political elites are well-educated, and a larger increase in human capital in CPC members widened the wage gap from 2002 to 2018; workplace discrimination against CPC non-members still exists even in the current period.

Gain or loss? The well-being of women in self-employment.

Using data from the Chinese Household Income Project survey, we find that self-employed women have lower levels of well-being compared with their male counterparts. When comparing individuals' well-being in self-employment and wage-employment, we discover that self-employed men have higher levels of health, the standard of living, satisfaction, and life satisfaction compared with wage-employed men, whereas self-employed women have lower levels of health and life satisfaction than their counterparts in wage-employment. Furthermore, if a given self-employed man or woman had been selected for wage employment, their well-being would not improve (controlling for individual characteristics that affect the likelihood to enter self-employment). Hence, self-employed women face a double challenge: lower well-being than both self-employed men and wage-employed women. The article discusses recommendations for future research and policy implications.

Parenthood and the gender wage gap in urban China

Using data from the Chinese Household Income Project survey and decomposition methods, this study explored the influence of parenthood on the gender wage gap in urban China in 2002 and 2018. Our findings showed that the employment rate is lower for women than men in both childless and with child groups, and the gender gap expanded from 2002 to 2018. The data revealed a parenthood wage penalty in 2002 and a parenthood wage premium in 2018. Moreover, the parenthood wage penalty was greater for women than for men and contributed to the formation of the gender wage gap. We also found that three components: motherhood wage penalty, fatherhood wage premium, and gender wage gap in the childless group contributed to the formation of the gender wage gap. From 2002–2018, the motherhood wage penalty decreased, whereas the fatherhood wage premium increased.

Self‐employment in Rural China: Its Development, Chara cteristics, and Relation to Income

AbstractChanges in the employment structure in rural China were studied with a focus on off‐farm self‐employment. Data from the Chinese Household Income Project surveys were used, covering the same 14 provinces from 1988 to 2018. We found that the proportion of adults in rural China with self‐employment as their primary form of off‐farm employment increased from only 2 percent in 1988 to 11 percent in 2013, with no further increases through 2018. In 1988 and 1995, the rate of self‐employment was highest in the eastern region but this regional pattern subsequently disappeared. The probability of being self‐employed in rural China was higher among married males than among unmarried persons. Having a migration experience increased the likelihood of being self‐employed. Since 1995, self‐employed households have had a higher average income than other categories of household. Based on estimates of income functions, we conclude that the income premium from being self‐employed increased rapidly from 1988 to 1995 to become remarkably large when only a few adults were self‐employed. However, as a larger fraction of the rural population entered self‐employment, the payoff from being self‐employed has rapidly diminished, although it was still substantial in 2018.

Evaluating the Redistributive Effect of Social Security Programs in China over the Past 30 Years

AbstractChina has improved its social security system in recent decades, with the aim of achieving universal coverage and improving the equity of income distribution. Based on data from the five rounds of Chinese Household Income Project surveys from 1988 to 2018, this paper examines the long‐term redistributive effects of social security programs in China. Our results show that social security programs have reduced income inequality consistently, and the positive redistributive effects have been improving for the past 30 years. Social security transfers have had an increasingly essential role in rural areas, especially after 2002 when China started to establish a comprehensive rural social safety net and expanded the coverage of the social security program. The redistributive efficiency of the social security system has also increased recently.

Influence of high-speed railway network on individual income: evidence from China’s microeconomic data

China’s increasingly developed high-speed railways (HSR) network has been found to have important influences on economic development, but analysis of its effect on individual income is inadequate. Based on the data of Chinese Household Income Project Survey (CHIP07 and CHIP13) and China’s HSR data, this paper examines HSR’s influence on residents’ income and the underlying mechanism. Using the difference-in-differences (DID) approach, we document that the connection of HSR network increases both urban and rural residents’ income. Besides, to address the potential endogeneity, we construct the least cost path spanning tree network to be served as an instrumental variable (IV) of HSR and the results confirm the reliability of the conclusion. What’s more, a HSR-induced industrial restructuring mechanism is revealed by further study, and those who received the higher education is proved to benefit most from HSR. Therefore, education turns out to be an effective way to enhance HSR’s income effect.

The disparities in Chinese urban and rural household savings rates

This paper attempts to investigate the opposing trends in Chinese urban and rural household savings rates observed in the micro data during the period 1995-2013. Using the Chinese Household Income Project Survey (CHIPS) data, we find that the average urban household savings rate has consistently risen while the average rural household savings rate has gone the opposite direction during the same period. Using a variant of Deaton-Paxson decomposition analysis, we find that urban and rural households displayed vastly different life-cycle savings rate profiles. Results from the median regression and Oaxaca–Blinder decomposition suggest that the increasing urban savings rate can be explained by the continuously rising household income and increased precautionary savings for health shocks, whereas the shifts in household characteristics examined were not able to account for the decrease in rural household savings rate. The urban-rural savings disparities can be fully explained by the urban-rural income gap.

Income comparison and happiness: The role of fair income distribution

AbstractRelative income gap is one of the most popular approaches for explaining the income–happiness relationship. We argue in this article that when people compare their incomes, they care about distributional fairness more than relative income disparity. It is difficult for us to explain China's income–happiness paradox if we simply compare the income gap and do not explore the income‐generation process leading to income inequality. We therefore employ an approach based on a responsibility‐sensitive theory of justice that decomposes individual income into fair and unfair components. As a proxy for distributional unfairness, unfair income is considered the main source of unhappiness. Using data from the Chinese Household Income Project survey, we find strong support for the negative relationship between income unfairness and happiness. We also find a significantly positive relationship between the relative income gap and income unfairness, which leads us to consider the income comparison hypothesis as the explanation for the income–happiness paradox in a new light. Sensitivity analyses confirm the robustness of our results.

The role of public pensions in income inequality among elderly households in China 1988–2013

Using data from the Chinese Household Income Project surveys for 1988, 1995, 2002 and 2013, we investigate the role of public pensions in income inequality among households with elderly members across two decades of pension policy reforms. We examine the distribution and role of public pensions at a national level and analyse the evolution of the contribution of public pensions to national income inequality across a much more extended time period than earlier studies, which have generally focused on regional changes over short periods. Our findings suggest that public pensions have become the most important source of income for households with elderly members on average in China, but the distribution of pension income is highly unequal, with a Gini coefficient of 0.74 in 2013. Public pension income has been the largest source of income inequality for elderly households since 2002 and contributed to more than half of total income inequality in the most recent year of the survey. This finding is robust against variations in the income inequality measures used. Additionally, our analysis suggests unequal distribution of pension benefits is the primary driver of pensioners' income inequality. Among several hypothetical policy changes, ensuring a minimum pension benefit for all existing pensioners seems to be the most fiscally effective option in reducing income inequality, with a 0.8% reduction in the Gini coefficient for a 1% increase in public pension expenditure.

Does an Entrepreneurial Career Pay for Women in China?

AbstractUsing data from the Chinese Household Income Project survey in 2013, our male–female pay‐gap decomposition illustrates that the gender earnings gap is larger among the self‐employed than the wage‐employed after controlling for the effect of various pay‐determining characteristics. Our self‐employed versus wage‐employed decomposition also controls for selection into self‐employment as well as those pay‐determining characteristics. We find that wage‐employed women would earn less than their current earnings if they shifted to self‐employment, while wage‐employed men would earn more than their current earnings if they became self‐employed. In essence, self‐employed women suffer from double jeopardy. They not only earn less than men in self‐employment due to lower returns for the same pay‐determining characteristics, but women in self‐employment also earn less than women in wage employment when they have the same pay‐determining characteristics.

Family size, birth order and educational attainment: Evidence from China

Using Chinese Household Income Project survey data from 2013, this paper investigates the effects of family size and birth order on children's educational attainment. The endogeneity of family size is an important identification issue in the test of the quantity-quality tradeoff. We use variations in a mother's exposure to various phases of China's family planning policies by Hukou type, ethnicity and regional differences in fine rates as instruments to identify the causal effects of family size. We find that family size has a negative effect on children's education. Using family fixed effects model, we find a positive birth order effect. In addition, both the family size and birth order effects are more pronounced for families where first-born children are females than those where the first-borns are males. Birth order effect is more evident in financially constrained families.

Does the "missing" high-income matter? -Income distribution and inequality revisited with truncated distribution

The issue of missing high-income data in household surveys has been a constant concern among researchers and practitioners when drawing inferences on inequality measures, discussing the relationship between poverty and growth, and examining the relationship between expenditure and income. We introduce a truncated distribution technique to correct the potential bias caused by the missing high-income data. Using 2002/2007/2013 Chinese Household Income Project Survey data and the 2002/2007/2014 US Consumer Expenditure Survey data, we test and estimate three commonly used income distributions: lognormal, Singh Maddala, and Beta II distribution with/without the truncation assumption. We find that the truncated Beta II distribution best describes income distribution in China, while the truncated Singh Maddala best fits the income in the US. The missing high-income in China has a significant but small effect on the Gini and Theil coefficients for 2007, whereas the missing high-income in the US has significant effects for 2007 and 2014. The Gini coefficient increases from the sample mean 0.44 to the simulation mean of truncated Beta II distribution as 0.47 for China in 2007 and increases from the sample mean 0.4422/0.4485 to the simulated mean of truncated Singh Maddala distribution 0.4506/0.4588 for 2007 and 2014 respectively. We also check the impact of missing low-income individuals on inequality assessment and find that the missing low-income data does not appear to underestimate inequality.

The effect of education expansion on intergenerational transmission of education: Evidence from China

More than 70 million people have attained a tertiary education due to China's higher education expansion (CHEE). Using data from the Chinese Household Income Project Survey, we examine how dose education expansion have an effect on the intergenerational transmission of education (ITE) by using the exogenous surge brought by CHEE. Our finding is that, after carefully addressing the interference induced by the Compulsory Education Laws and the selection bias caused by intergenerational co-residence, CHEE reduces ITE when educational achievement is measured by schooling years. However, when taking the quality of higher education into account, we find that CHEE does not have a significant effect on ITE, which suggests that the intergenerational inequality in higher education remains. Moreover, we identify the mechanism that the inequality in the quality of high school education extends to tertiary education to explains our findings. To account for the mixed findings in previous literatures, we further propose a general framework for understanding the effect of education expansion on ITE.

Family Size, Birth Order and Educational Attainment: Evidence from China

Using Chinese Household Income Project survey data from 2013, this paper investigates the effects of family size and birth order on children’s educational attainment. The endogeneity of family size is an important identification issue in the test of the quantity-quality tradeoff. We use variations in a mother’s exposure to various phases of China’s family planning policies by Hukou type, ethnicity and regional differences in fine rates as instruments to identify the causal effects of family size. We find that family size has a negative effect on children’s education. Using family fixed effects model, we find a positive birth order effect. In addition, both the family size and birth order effects are more pronounced for families where first-born children are females than those where the first-borns are males. Birth order effect is more evident in financially constrained families.

Estimation of Lorenz curves based on dummy variable regression

We propose a new estimation method of the Lorenz curve based on dummy variable regression for granting clear economic connotations to parameters in the estimation of the Lorenz curve. The dummy variable regression model of the Lorenz curve is established by introducing dummy variables to group data about income level. On this basis, it is proved that the regression function is endowed with the convexity that the Lorenz curve should have. To verify the effectiveness of the new method, empirical study is carried out taking the income data of urban and rural residents in the Chinese Household Income Project Survey (CHIP) database as examples. In the empirical study, the proposed model is compared with several existing classical parameter models. The results indicate that the slope parameter of the model represents the cumulative income–population resilience of corresponding residents, and reflects the income structure of residents to some extent. Meanwhile, compared with classical parameter models, the newly proposed method has advantages of higher fitting precision and stronger adaptability.

The changing texture of the city-size wage differential in Chinese cities – Effects of skill and identity

This study examines the city-size wage premium (CSWP) for local urban hukou holders (citizens) and rural migrants by utilizing data from the Chinese Household Income Project surveys (CHIP 2002 and 2013) employing OLS and Propensity Score Matching method. Heterogeneity of skills (measured by level of education) is found to be one determinant of the city-size wage disparity. But irrespective of skills, citizens receive a higher city-size premium than the rural migrants; nevertheless, the premium received by rural migrants has increased over the past few years. Within the similar occupation and type of firm, a highly skilled citizen received a CSWP of Yuan 880.08 in 2013 (Yuan 347.48 in 2002) on average per month. Whereas, a highly skilled rural migrant received an average monthly premium of Yuan 601.71 in 2013, and an insignificant premium in 2002. The corresponding values for low skilled citizens and rural migrants in 2013 are Yuan 415.67 and 267.27 respectively. Our results establish that there has been a positive effect on rural migrants from the relaxation of policies and labour laws, and a move towards equalization within the same level of skills.