Chinese Household Income Project Research Articles

Can the digital economy close the gender wage gap? Evidence from China

Using data from the Chinese Household Income Project and Chinese Family Panel Studies, this paper systematically examines the impact of the digital economy on the gender wage gap. According to empirical evidence, the development of the digital economy can reduce the gender wage gap, and this result still holds after a series of robustness tests. Consistent with our theoretical analysis, the results of mechanism analysis confirm that this relationship holds because the development of the digital economy can promote women’s formal employment, ease family care burdens of women, and promote the formation of egalitarian gender perspectives. Heterogeneity analysis indicates that this effect weakens with increasing wage rates and differs among people with different skills, industries, sectors, and regions. Further analysis suggests that among the entrepreneurial population, the digital economy has a sizable effect on reducing the gender wage gap.

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.

What explains the recent increase of gender wage gap in China?

AbstractThis paper investigates the changes of gender wage gap in urban and rural areas and examines the effect of wage structure and unobserved characteristics on the gap by using the Chinese Household Income Project (CHIP) survey in 2013 and 2018. We document a significant increase of the gender wage gap in both areas as well as among rural‐to‐urban migrants. By applying Katz and Murphy's supply‐demand framework, we find that the demand has shifted toward younger, more educated workers, and the demand for male workers is higher than that for female workers during the time. The Blinder–Oaxaca decomposition of gender wage gap suggests that factors, such as occupation, parenthood status, and industry, have contributed to the expansion of wage gap. Furthermore, the Juhn–Murphy–Pierce decomposition of the change in gender wage gap implies that the expansion is owing to rising discrimination against females and gender‐specific factors such as observed and unobserved characteristics that have performed unfavorably for females.

The Gender Gap in Pension Income for Urban Employees in China

Gender interests are crucial in the redistributive equity of the pension system. This paper investigates the gender gap in retirement pension incomes of urban employees in China by using data from the Chinese Household Income Project and decomposes the main factors contributing to the gender gap. We find that the pension income of female employees after retirement is significantly lower than that of male employees. Decomposition reveals that age, pre-retirement wage level, and type of work unit are the main factors contributing to the gender gap. Further, we find that the gender gap in pension incomes is lower for employees employed in the public sector than for those employed in enterprises, because enterprises are more affected by the market environment than the public sector, and female employees tend to suffer more market discrimination. In general, females still face the challenge of having significantly lower pension standards than males after retirement.

New forms of employment: development of take-away delivery and urban–rural wage inequality

PurposeSince smartphones became ubiquitous, online grocery and food purchases through take-away delivery platforms have steadily increased in China. Nevertheless, whether the development of take-away delivery can ameliorate urban–rural wage inequality still requires further analysis. The purpose of this paper is to clarify whether this positive effect exists.Design/methodology/approachThis paper makes estimations based on city and individual levels combining the Chinese Household Income Project (CHIP) 2008, CHIP 2013, CHIP2018 survey data and the take-away delivery site data. At the city level, the Oaxaca-Blinder (O-B) decomposition method is employed to construct wage inequality index of urban and rural labors. At the individual level, this paper analyzes urban–rural wage differentials with high or low formal education level.FindingsThe rapid establishment of take-away delivery sites has resulted in an increase of 52.425 yuan on average in the annual wage of rural labors with low formal education level. When the cumulative number of sites increases by 1 unit, the annual wage inequality index decreases by 0.007 on average. Labors with the characteristics of rural household registration and low education can enjoy more dividends. Through inter-/within-industry decomposition, this paper elaborates formal education, age and cross-industry transfer as the main factors for the improvement of urban–rural wage inequality. Narrowing effect of wage differences between different groups in multiple sample slices also contributes to the mechanism analyses.Originality/valueTo the best of the author’s knowledge, this paper is the first to analyze the impact of take-away delivery development on the urban–rural wage inequality from the perspective of the establishment of take-away delivery sites. This empirical study will enrich the existing theoretical perspectives on urban–rural divide under the emergence of new forms of employment. The results indicate that new forms of employment represented by take-away delivery can not only promote economic growth, but also eliminate urban–rural inequality.

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.

Productivity difference or discrimination effect? Disability‐related wage gap in China

The wage gap between people with disabilities (PWD) and people without disabilities (PWOD), which discourages PWD from entering the labor market, is attributed to two factors: productivity differences and discrimination effects. To determine whether PWD in China face wage discrimination in the labor market and which factor contributes more to the disability‐related wage gap in China, this study uses Chinese Household Income Project data (years 2007 and 2013) to estimate disability‐related wage discrimination, decomposing the wage gap between PWD and PWOD using the Oaxaca‐Blinder and Neumark approach. The findings demonstrate the presence of disability‐related discrimination in China, accounting for approximately 38.9%–52.4% of the wage gap between PWD and PWOD. Unobservable productivity effects contribute more to the wage gap than does disability‐related discrimination. Male PWD living in rural areas and less educated people are more likely to experience wage discrimination in China. Moreover, individuals with disabilities in rural areas experience significant disability‐related discrimination, whereas no such phenomenon is observed in urban or migrant populations. Future human resource management policies should consider antidiscrimination measures and improve the productivity of PWD, including providing reasonable accommodation for PWD in the workplace and ensuring equality in job searches and employment.

Misreporting in household income and expenditure: Evidence from the Chinese Household Income Project

This study provides new evidence on misreporting in household income and expenditure using recall and diary data from the 2013 Chinese Household Income Project. Using more accurate diary records as benchmarks, we observe substantial and systematic misreporting in income and expenditure from recall data. Two main patterns of misreporting are identified: mean reversion and correlation with subjective well-being (i.e., happier respondents tend to overreport).

Human capital and migration: A cautionary tale

We analyze the impact that the option of migration might have on human capital accumulation. We show that, when the return to education for migrants is lower in the destination than in the origin, the overall incentive to accumulate human capital is reduced as restrictions on migration are relaxed. We use panel data from the Chinese Household Income Project to document that the return to education for rural individuals is lower in urban areas than in rural areas. We then use a difference-in-differences design to show that the 1983 reform that eliminated the strong restriction that existed for rural–urban migration resulted in a reduction of 0.4 years of schooling for rural people in China. Guided by these results, we estimate a life-cycle dynamic discrete choice model of education decisions and circular rural–urban migration in which individuals differ in observable characteristics and unobservable cognitive and non-cognitive skills. We validate the model by showing it is able to replicate the impact estimates from the difference-in-differences specification. Our simulations show that, while it would take a small subsidy (conditional on staying in school) to undo about 40% of the negative effects of the 1983 policy on rural education, the annual subsidy would need to be half of annual earnings to undo the effects entirely.

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.

Economic performance and good governance: examining the role of economic well-being in local governance evaluation in China

Citizens’ satisfaction with governance is a critical political issue in China. How do citizens evaluate the effort to improve governance quality by the Chinese government? Are citizens satisfied with the governance at the local level? Does citizens’ economic well-being affect their evaluation of local governance, and if so, how? Drawing data from the Chinese Household Income Project (CHIP) 2018 survey, this study attempts to provide some insights to these questions by investigating whether citizens’ economic well-being shapes their evaluations of local governance. We find that respondents with a stronger sense of subjective economic well-being are more likely to be satisfied with local governance. However, objective economic well-being has a slightly negative impact on local governance satisfaction. Chinese citizens generally express a high level of satisfaction with local governance. Therefore, perceived economic well-being influences local government favorability more than the representation of economic well-being in material wealth. The findings point to a complex relationship between economic well-being and evaluation of governance quality.

Trade liberalization, city size, and urban wage premium: evidence from China’s city and individual micro-data

In the context of trade liberalization and new urbanization, it is important to study how urban openness leads to wage premiums and improvements in income distribution. This paper utilizes micro-data from the Chinese Household Income Project and matching data from 144 cities to investigate the relationship between trade liberalization, urban scale, and urban wage premiums. The results indicate that trade liberalization significantly increases urban wage premiums, which is particularly evident during the early stages of China’s accession to the WTO. However, this effect may fluctuate over time. Surprisingly, in China, the urban scale can increase labor wage income, but it does not magnify the wage premium effect of trade liberalization. Heterogeneity tests based on regions, firms, and income groups suggest that the wage premium effect of trade liberalization is higher in eastern and central region cities than in western region cities, labor wage growth in the service sector is more pronounced than in the industrial sector, and the impact of trade liberalization on wage growth for the middle and lower-income groups is greater than for the high-income group, which helps to narrow income disparities among different groups. These findings are of great policy significance for improving income distribution through labor market liberalization. In this context, they highlight the importance of comprehensive openness and new urbanization in China.

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.

RETURNS TO EDUCATION UNDER THE HUKOU SYSTEM: WHAT IS THE ROLE OF SCHOOL TYPE?

Purpose – Estimating the gap in returns to education between China’s urban and rural areas based solely on education attainment can be misleading, especially when there are significant differences in the allocation of educational resources between urban and rural areas. This paper explores the relationship between school types, primarily representing the educational resources available in China, and education returns in urban and rural China under the Hukou system.Methodology – This paper used data from the 2013 Chinese Household Income Project (CHIP) and applied the OLS method to estimate the traditional Mincer and extended models by adding school types.Results – Firstly, we found that school types significantly impact income, and different types of schools have different returns on education. The returns to school type increase with the geographical administrative level of the school. In addition, in most cases, the impact of key schools on the income of urban people is more significant than that of rural people. Secondly, when we consider the effect of school type on income, the gap in education returns between non-agricultural Hukou groups and agricultural Hukou groups is widened compared to the results under the traditional Mincer model. Finally, migration does not appear to have brought the desired improvement to their education, with the returns to education for migrants being significantly lower than rural in some cases.Implications – For individuals, especially those rural Hukou holders, investment in education should be strengthened to improve access to key schools. Providing equal access to quality education and reducing educational disparities between urban and rural areas is essential for the government.Originality/Value – The results highlight the role of inequality in the allocation of educational resources and the inequality of educational opportunities among the groups with different Hukou statuses and also show that migrating to urban areas may place migrants in a more adverse environment.

Early exposure to air pollution and cognitive development later in life: Evidence from China

This paper studies the relationship between prenatal exposure to air pollution and youth cognitive skill development in China. This study combines the city-level air pollution data compiled by the World Bank with the Chinese Household Income Project. A one-milligram decrease in prenatal exposure to total suspended particulates is associated with an increase of 6.16 standard deviations in literature scores and 3.95 standard deviations in math scores for children aged between 6 and 19. A one-milligram decrease in both prenatal and postnatal air pollution exposure is associated with an increase of 6.41 standard deviations in literature scores and 4.21 standard deviations in math scores. Prenatal air pollution exposure has a persistent detrimental effect on children's health, which in turn negatively affects their academic performance. These findings provide additional evidence supporting the “fetal origins” hypothesis, which predicts early shocks in utero affect the outcomes later in life.

Impact of Natural Disasters on Household Income and Expenditure Inequality in China

Natural disasters have been demonstrated to cause devastating effects on economic and social development in China, but little is known about the relationship between natural disasters and income at the household level. This study explores the impact of natural disasters on household income, expenditure, and inequality in China as the first study of this nature for the country. The empirical analysis is conducted based on a unique panel dataset that contains six waves of the Chinese Household Income Project (CHIP) survey data over the 1988–2018 period, data on natural disasters, and other social and economic status of households. By employing the fixed effects models, we find that disasters increase contemporaneous levels of income inequality, and disasters that occurred in the previous year significantly increase expenditure inequality. Natural disasters increase operating income inequality but decrease transfer income inequality. Poor households are found to be more vulnerable to disasters and suffer significant income losses. However, there is no evidence to suggest that natural disasters significantly reduce the income of upper- and middle-income groups. These findings have important implications for policies aimed at poverty alleviation and revenue recycling, as they can help improve economic justice and enhance resilience to natural disasters.

Building social trust through education

Social trust plays a critical role in shaping the quality of governance. However, we still lack sufficient causal evidence of how social trust can be cultivated through the lens of public policy. In this paper, we, therefore, address this issue by identifying college education as a significant source of social trust. We employ a fuzzy regression discontinuity design based on the massive college enrollment expansion in China that began in 1999. Specifically, using nationwide survey data from the Chinese Household Income Project (CHIP), we find that college education improves both generalized and personalized trust at the individual level. These effects are most pronounced among females and individuals in less developed areas (i.e., Central and Western China). Further analysis demonstrates that college education enhances individuals' social trust by elevating their socioeconomic status, specifically by increasing their chances of obtaining urban Hukou and raising their income. Overall, our findings suggest that in developing countries, social trust can be cultivated by improving access to higher education.

Does compact city shape matter to residents' happiness?

This paper investigates the impact of city shape variation on residents' happiness in Chinese cities. We first measure the city shape index of Chinese cities between 2000 and 2015 using matched data from the European Space Agency Global Land Cover dataset and the Chinese administrative map to delineate the changes in city shape in China's urbanization. Then we use a reduced-form estimation strategy to examine the causality between city shape variation and urban residents' happiness using our city shape dataset and the microsurvey data of CHIP (Chinese Household Income Project). We find that city shape exerts a negative influence on the happiness of urban residents. Such an effect is more pronounced in large cities. However, well-developed public transportation infrastructure can mitigate the negative impact of a non-compact city shape. Turning to the mechanism, commute time to the workplace and amenities is the main channel through which city shape works. We find that bad shape significantly increases the commute time between residential, workplace, and commercial amenities and therefore makes urban residents unhappy.

Revisiting income inequality among households: New evidence from the Chinese Household Income Project

The Gini coefficient has been widely used as a key indicator to measure income inequality. However, differences in the measurement methods and information in the sample are the main reasons for the bias in the Gini coefficient in China. In order to improve the accuracy of the measurement, we revisit income inequality among Chinese families and propose a multi-group Gini coefficient method from the perspective of optimizing the income distribution function. Based on the disposable income of households in the Chinese Household Income Project (CHIP), a generalized logistic distribution function is used to measure national, urban and rural Gini coefficients and their contribution rates. The results indicate that: The multi-group Gini coefficient method based on the particle swarm optimization (PSO) algorithm makes full use of valid microdata-related information, improves the accuracy of traditional methods of fitting urban or rural income distribution and reduces measurement bias based on the realities of China's binary economic structure and the large size of the population. Overall, the income inequality in China has widened over the five-year period from 2013 to 2018. On the one hand, it has been consistently found that the urban-rural income gap is the most important source of income inequality in China (making a contribution exceeding 50%); on the other hand, the contribution of income inequality within urban areas has increased significantly. Education and industry of urban and rural households as well as the difference in their rates of return are the main causes of the income gap between the urban and rural areas in China. Addressing the root causes of income inequality warrants the creation of institutional conditions for equitable access and points of departure in education and industry.

Correction of China's income inequality for missing top incomes

AbstractAfter accounting for top incomes missing from the Chinese Household Income Project, this paper examines the income inequality trend in China during the 21st century. Our analysis, which involves fitting the upper tail of the income distribution to a power‐law model, reveals that the authoritative income survey data miss 0.68% of the population and 6.19% of aggregate income in 2018. Despite the most recent survey data providing better coverage of top incomes, our correction is still crucial. The raw survey data indicate a consistently increasing Gini coefficient between 2002 and 2018, but the corrected index starts to decline from 2013. Meanwhile, the revised top 1% income share increases from 7.01% in 2002 to 7.89% in 2013 and then slightly decreases to 7.64% in 2018, while the revised top 10% income share stabilises at around 33% throughout the period. Notably, China's revised top 10% and top 50% income shares in 2018 are close to those of the United Kingdom but are considerably lower than those of the United States.