Gender Wage Gap in China After the

Economic Reform

Figure 1 Ken Orvidas Illustration (Orvidas and Scarlatelli 2011)

Moira Mastrone

Development and International Relations, 9th Semester

Department of Culture and Global Studies, Aalborg University

Supervisor Wolfgang Zank

Abstract

This project focuses on gender wage gap and discrimination against women in China during the

course of the economic reforms. Moreover, the paper examines why from egalitarian conditions,

China is nowadays one of the most unequal country in the world. The paper applies two different

theories: Glass ceiling and Sticky Floor metaphors, and the Discrimination theory by Arrow and

Becker. The analysis was conducted to answer the following problem formulation: Why after the

economic reform in China, the gender wage gap reappeared? To answer the problem formulation I

have been used a secondary analysis. After analyzing the development and changes in China since

the reforms started in 1978 and applying the two theories on the specific case, the paper concludes

that because of privatization and marketization of the economy wage differentials between genders

grew together with discrimination against women. During the economic transition to a market

economy, women have been adversely affected in the participation in the privatized economy. From

the analysis comes out that there is gender discrimination in several aspects of the labor market, such

as difference in monetary compensation and in work conditions.

Keywords: Gender Wage Gap, Discrimination, China’s economic reform, Glass ceiling, Sticky

Floor, Discrimination Theory

List of acronyms

GFCF – Gross Fixed Capital Formation

GNP – Gross National Product

HRS – Household Responsibility system

KMT – Kuomintang

PRC – People’s Republic of China

SEOs – State Owned Enterprises

U.S. - United States (of America)

US$ - United States Dollars

USSR - Union of Soviet Socialist Republics / Soviet Union

TVEs – Townships and Village Enterprises

Table of Contents

Table of Contents .............................................................................................................................................. 4

1. Introduction ............................................................................................................................................... 5

1.1. Definitions ......................................................................................................................................... 5

1.2. Method ............................................................................................................................................... 5

2. Theories ..................................................................................................................................................... 6

2.1. Glass ceiling and Sticky floor metaphors .......................................................................................... 6

2.2. Discrimination Theory in the Market Place....................................................................................... 8

3. Historical Background (1930s-2014) ...................................................................................................... 10

1. Analysis ................................................................................................................................................... 15

2. Conclusion ............................................................................................................................................... 20

3. Bibliography ............................................................................................................................................ 23

Page 5 of 24

1. Introduction

Rising inequality is a serious concern for China. Since the late 1970s, China went through several

reforms and the country has experienced significantly rapid economic growth and structural changes

in the economy and, at the same time, widening income inequalities. One of the biggest changes in

China was the transition from a planned system to a market economy, through privatization of the

public sector. The work conditions of Chinese women changed during the years, and since the

reforms, women and men experienced for the first time earnings differentials. Before, during the Mao

era, the socialist constitution guaranteed equal rights in all aspect of the life, including equal pay for

equal work. China is a country with solid traditions under Confucianism, which considers women

subordinated to men and destined to serve others. The Cultural ideology can be find in the labor

market together with other discriminations against women. My aim is to investigate why after the

starting of the economic reform in China, women passed from an egalitarian earning condition to earn

35% less than men colleagues. Therefore, I have the following problem formulation:

Why after the economic reform in China, the gender wage gap reappeared?

1.1. Definitions

Discrimination: In socio-psychological literature, one individual is said to discriminate against (or in

favor) another if his behavior toward the latter is not motivated by an “objective” consideration of

fact (Becker 1971, 13).

1.2. Method

During the development of this project, I have been working as an intern at a research institute in

Bolzano, Italy, called Arbeitsforderungsinstitut| Istituto Promozione Lavoratori. One of the topics the

institute is dealing with is gender issues research on local areas, this opened my interest in gender

wage gap topic. At the beginning, my intention was to compare some aspects on gender issues

between the province of Bolzano and China, but after further reflection, I decided to concentrate only

on China, and on gender wage gap. To find a proper problem formulation I first researched about the

topic in general and found out that before the economic reform in China there was no wage gap

between genders, while it existed between rural and urban workers. However, I decided to focus on

China after the economic reform. First, I started to gather information about the situation in China

Page 6 of 24

before and after the start of economic reform in 1978, and conducted a literature review. This helped

me to get a good overview of the situation. The problem formulation was clear almost from the

beginning. I knew what I wanted to find out through my research. During the internship, I developed

this project outside work hours, as the institute deals only with local problems, and I was dealing with

other projects, which were not connected with the subject in the scope of this work. For this reason,

I decided to conduct a literature research and use data already available thanks to previous researches.

This allowed me to more efficiently manage the time and cost constrains, as data on the topic is widely

available. Of course, there are also some disadvantages that I am aware of, as that, there are a lot of

information available about the gender wage gap topic in China, which made it difficult sometimes

to choose the relevant ones. However, I have tried to minimize this problem by referencing only

reliable sources.

After I decided how to conduct this project, I searched for relevant literature both on the internet and

in the library. I have used literature from academic journals and books but before I decided to use any

kind of literature, I always made sure that the information was scientifically verified, and I have tried

to use literature that is objective.

While reading articles about the topic I went through several relevant theories, and decided to

concentrate on the following two: Glass ceiling and Sticky floor metaphors, and Discrimination

Theory. To solve my problem I first acquired the relevant knowledge of the different theories and

then applied them on the specific case of China. Moreover, as I decided to focus only on the existence

of gender wage gap after the economic reform to make it more specific.

2. Theories

In this section, I discuss two relevant theories - Glass ceiling and Sticky floor metaphors, and

Discrimination Theory - which I am using in my analysis to better analyze the situation in China. I

decided to discuss the basic assumptions and the academic debate of each theory and conclude with

hypothesis about the role of women in China’s labor market.

2.1. Glass ceiling and Sticky floor metaphors

During the years, scholars coined several terms, creating metaphors to explain the problem facing by

women in the labor market. I decided to use two of them, which will help me later to analyze the

Chinese situation. Those are the metaphors of the Glass ceiling and Sticky floor. To explain the Glass

Page 7 of 24

ceiling metaphor I used two different scholars, which are complementary to each other, Denise

Daniels, and Cherie D. Werhun.

Werhun as Daniels, affirmed that Glass ceiling refers to an “invisible and unbreakable barrier”,

which stops the progression of women and members of ethnic and racial minority groups to advance

in executive management positions, despite their qualifications (Werhun 2011, 625; Daniels 2013,

330). The term was used for the first time in the 1980s and since then has been used to describe the

lack of women in upper management and executive positions (Daniels 2013, 330).

During the last 50 years, women became a high percentage of paid workforce around the world, and

their presence as leadership in organizations, also increased (Ibid). However, the representation of

women in leadership is not as high as their general participation in the workforce, even more at the

senior levels. Over the years, analysis determined why there is a differential between men and women

in executive-level representation, and numerous different explanations arose, focusing on explicit

discrimination, perceptual biases, family demands, and women’s behaviors (Ibid), education,

experience, and ability are controlled (Werhun 2011, 625).

Regarding explicit discrimination, Daniels wrote, “between employees with identical backgrounds or

performance, those with male names are more likely to get hired and are rated

more highly than those with female names” (Ibid.). Moreover, she affirms that women need to

perform better than male in order to achieve the same level of work opportunities (Ibid).

Daniels explains that one reason why women do not achieve high levels of work opportunities is

“unconscious perceptual biases related to gender stereotypes prevent people from fairly evaluating

others” (Daniels 2013, 331). Furthermore, she adds that gender stereotypes about women describe

them as “relational, nurturing, helpful, and kind”, while men are described as “assertive, competitive,

self-reliant, and ambitious” (Ibid.).

Daniels argued that a possible explanation to why women are discriminated at work is related to the

different roles men and women play in the family. Women are more likely to work part time therefore

opportunities for a promotion is no longer available. She argues that women work more than men do,

not only at work but also while doing unpaid work, which means taking care of household and

childcare responsibilities (Ibid).

Page 8 of 24

Daniels noticed that men are more promoted than women, because they are seen by their bosses as

stable persons and committed to their jobs. While women as mothers need more free time to dedicate

to their children and are not able to advance into higher levels in the organizations (Ibid.). Daniels

explained that these judgments could be understood by seeing how men and women behave. Women

have family – work conflicts and their social networks are not as professionals as men (Ibid).

Furthermore, women, because of existence of stereotypes, are less suitable for executive positions

and therefore organizations feel, as they are not a good investment (Werhun 2011, 626).

The glass ceiling metaphor over the years was connected with Sticky floor metaphor, coined by

Catherine Berheide in 1992. As she affirmed, this metaphor refers to low paying, low prestige, and

low mobility jobs typically held by women. Women in this position find themselves stuck with

limited opportunities of promotion and a better-paid position (Berheide 2013, 826). Berheide

explained that the sticky floor metaphor symbolizes the first barrier that keeps women mostly from

moving up, while the glass ceiling symbolizes the final barrier that keeps women from reaching the

highest rung on the organization, therefore these metaphors can be used in all levels of the labor

market (Ibid.).

Scholars have noticed that the entry point of a woman in the organization establishes which career

paths are open or blocked to her. Job ladders structure the opportunities of mobility in the workplace

and, as Berheide affirms, typically consist of a set of sex-segregated positions (Ibid., 827).

Berheide concludes that societal norms, cultural stereotypes, and system of power and privilege

conditions employers’ decisions regarding which types of workers belong in which occupations

(Berheide 2013, 828).

2.2. Discrimination Theory in the Market Place

To explain discrimination theory in the labor market I decided to use Becker’s Discrimination Theory

in the Market Place, and Arrow’s Theory of Discrimination.

As Becker affirmed, money is commonly used as a measuring bar, but it also serves as a measure of

discrimination. He analyzed the discrimination between white men and other races present in U.S.

during the 1950s. Arrow developed his theory after Becker, they both affirmed that there are different

groups of workers, such as skilled or unskilled, white or black, men or women (Arrow 1971, 1), or

Page 9 of 24

persons with unpleasant personalities, and all those who do not have non-monetary considerations in

deciding whether to hire, work, or buy from an individual or group (Becker 1971, 11).

As argued by Becker, an employer may refuse to hire someone from one of the group listed above

solely because he erroneously underestimates their economic efficiency. The employer’s behavior is

discriminatory not because he has prejudices against them but because he is ‘ignorant’ of their true

efficiency (Ibid., 16). Moreover, he affirmed that ignorance might disappear by the spread of

knowledge, while prejudice or preference are independent from knowledge (Ibid.).

Becker explained how employers’ tastes combine with market forces to generate discrimination in

the labor market. An employer expresses his subjective tastes or preferences by refusing to hire

someone (Ibid., 39). Moreover, an employer when there is need to hire a new worker wants someone

he can invest in (Ibid., 40). While Arrow argued that, in a standard economy theory, if there is

presence of different wages or any kind of discrimination to a group, it is because of differences in

productivity (Arrow 1971, 1).

As argued by Becker, market forces might result from less gender discrimination only if

discrimination becomes too costly for employers to compete with those employers who do not

discriminate against women or other racial or ethnic groups (Ng 2004, 588). Furthermore, Becker

affirmed that non-discriminatory employers would hire women and this would give employers a

lower cost of production than discriminatory employers (Ng 2007, 149).

Ng explained Becker’s theory arguing that those who are disfavored will earn less because those who

are favored are overpaid (Ng 2007, 149); the same applies to those who are less skilled, and will earn

less than those highly skilled (Maurer-Fazio and Hughes 2002, 710). Another factor, which can

discriminate workers, is related to their education, as argued by Arrow, if there is the presence of

discrimination between black and white races, referring to Duncan’s explanation, some possible

causes of productivity differences could be differences in educational quantity and quality, family

size, and household headed by women (Arrow 1971, 3).

Arrow, as Becker affirmed that co-workers discrimination could exist, so a possible discrimination

from employees are indirectly discrimination by employers. (Ibid., 10)

After 1978, in China, women started facing gender discrimination in the labor market. Often Glass

ceiling and Sticky floor metaphors are used in Western countries to analyze and explain why is so

Page 10 of 24

difficult for women to get a job and be trusted by employees, but can the wage differences on the

Chinese labor market reflect stereotypes and perceptual biases on the employers’ side?

Discrimination against women reflect that many work places in China after 1978 still demanded very

heavy physical work where women could not perform so strongly as men due to physiological

reasons?

3. Historical Background (1930s-2014)

In this chapter, I give a descriptive overview of China before and during the economic reform. I have

structured this section chronologically in order to make the overview clearly arranged. China has a

long history, but what is relevant for this project regards the different steps of the economic reform,

and the work conditions of Chinese women before and after 1970s.

China experienced a modest but significant growth before the World War II. This economic advance

opened China in both international trade and investment. China, by the 1930s, had developed several

modern sectors, such as industry, communications, transportation, banking and finance, in which the

domestic ownership was predominant (Brandt and Rawski 2008, 4).

After several years of civil strife between Communist and Kuomintang (KMT) forces (Brandt and

Rawski 2008, 4), the People’s Republic of China (PRC) was established in October 1949, and it

inherited an economy, which was damaged by war and inflation. The new regime, moved to a

different type of economic system, which was modeled by the Soviet experience. As written by

Brandt and Rawski, Soviet advisers and Soviet-trained specialists worked to establish new institutions

organized with five-year plans (Brandt and Rawski 2008, 4). In 1958, Mao Zedong created, people’s

communes which were Chinese villages large-scale collectives. Moreover, the Chinese industrial

system was less centralized than in the Soviet Union (Brandt and Rawski 2008, 4), and it underlined

the development of heavy industry (Brandt and Rawski 2008, 169). Under the planning system prices

were set by the state, as products, inputs - including labor (Brandt and Rawski 2008, 169), and in fact

urban jobs were assigned by the state, and firms were not allowed to dismiss. There was total

governmental control, and all workers were hired by the state or collective sectors (Meng, Shen and

Xue 2013, 228). In Mao Zedong’s era, the employment status of women in China changed from one

of the lowest in the world to one where there was a perfect equality between men and women. Before

1950s, Chinese women suffered from a tradition of the Confucianism ideology, which sees the

Page 11 of 24

woman as subordinate to men and destined to serve the others. Moreover, they had access to few

formal employment opportunities. Chinese women before 1950s suffered from wage and work

discrimination. Under Mao Zedong, the government instituted policies, which provided equal pay for

equal work. Female work participation in urban area was more than 90% before the economic reform

started (Dong, et al. 2002, 157). Although conditions had improved, discrimination still existed in

rural areas and women opportunities to work off the farm were limited. Still, the wage gaps were

limited compared the rural areas of other countries (Ibid.). As previously mentioned, China was an

egalitarian society before the reforms, despite the existence of urban-rural gap and inequality (Wang,

Wan and Yang 2014, 686). Urban residents were benefited from privilege when compared to rural

villagers. In fact, in urban areas, workers were paid a subsistence wage to support industrialization.

The low wages were made possible thanks to the low food prices and the direct provision of nonwage

benefits to workers and their families, such as housing, health care, childcare, and pensions (Brandt

and Rawski 2008, 169). This made many villagers migrate to the urban areas. Substantial differences

in income and life chances favoring urban citizens constrained the regime, in 1958, to curtail

migration to the cities by reviving China’s household registration system (Brandt and Rawski 2008,

5), that assigned agricultural or non-agricultural status to each person based primarily on place of

birth (Brandt and Rawski 2008, 170). This system was known as Hukou (Ibid., 5), and remains

effective today (Wang, Wan and Yang 2014, 698). In the PRC, rural labor surplus could not migrate

to the cities, until 1993, when the grain rations were abolished with the integration of labor mobility,

to repair the emergency of rural-to-urban and regional migration. These migrants, still today do not

have urban Hukou. Those are discriminated in the labor market, and are denied most basic social

services and benefits (Wang, Wan and Yang 2014, 698).

Moreover, China’s planned economy delivered important gains in creation of human capital:

mortality declined among infants and new mothers, and school attendance and educational attainment

increased. However, these positive achievements coincided with failures in the area of food supply.

Food scarcity did not decrease until the reform started, indeed between 1958 -1962 about 45 million

people died of starvation (Dikötter 2010, preface). As Brandt and Rawski affirmed, food supplies for

millions of Chinese in rural area were no better in the 1970s than 1930s (Brandt and Rawski 2008,

5).

In 1978, the PRC began reforms introducing the household responsibility system (HRS) in agriculture

(Wang, Wan and Yang 2014, 686). Collective farming, which were created by Mao Zedong in 1958,

Page 12 of 24

were replaced by household cultivation, the shift meant that farmers could claim their harvest and

profits for themselves, while before they were receiving tiny shares of collective production (Brandt

and Rawski 2008, 9). Under this system the farming land was allocated to an individual household.

These introduced incentives into the rural economy, giving the opportunity to the households to grow

due to equal distribution of land, which were absent before (Wang, Wan and Yang 2014, 686), and

helped to stimulate a large increase in farm productivity (Brandt and Rawski 2008, 170).

From the first reform in 1978, China has experienced both rapid economic growth and fundamental

structural changes, which increased employment off the farm (Zhang, De Brauw and Rozelle 2004,

230). The government encouraged the rural workers to “leave the land without leaving the village”

(Brandt and Rawski 2008, 170), and the farmers had the permit by the government to engage in long-

distance transport and marketing of agricultural products. For the first time farmers had the right to

conduct business outside their home village and, by 1984, farmers were free to have business in the

nearby towns in collectively owned townships and village enterprises (TVEs) (Ibid.). Another

significant change in China after the reforms was the expansion of higher education. For 10 years,

between 1966 and 1976 - period known as Cultural Revolution, schools were closed, and the result

was that an entire generation of young Chinese missed schooling for various years. When the

universities started to get new applications after 1977, everybody was allowed to sit in the National

College Entrance Examination even those who missed the opportunity to go to university during the

Cultural Revolution. The result was that between 1980s and 1990s labor force with a tertiary degree

increased significantly, and it growth during the decade. The proportion of the labor force with a

college or above qualification between 2001 and 2002 increased by 4.5% points (Meng, Shen and

Xue 2013, 230).

The period from 1985 to 1992 was characterized by the industrial reform and by the transition from

a socialist economy to one with more competition. In October 1984, the Communist Party passed the

“resolution of economic institutional reform” (Brandt and Rawski 2008, 171), which changed the

total wage quota system of the urban workers. Each enterprise’s total wage bill and profit payments

to the government were calculated by its economic performance in the previous three years (Ibid.).

In 1986, labor contracts were integrated, which had never existed before in China, and by 1997 one

hundred million of employees had a labor contract. The introduction of labor contracts was really

successful among the firms, as they were free to select and hire suitable workers, even if at the time

they could not dismiss more than 1% of their employees each year (Ibid., 172). In the late 1980s,

Page 13 of 24

migrants moved to urban areas and the growth of migrant population in cities created tensions with

urban residents (Brandt and Rawski 2008, 172). In 1988, most workers were administratively

allocated to their employment (Appleton, Song and Xia 2014, 3), job security was guaranteed and

there was almost no labor mobility, as there was virtually no private employment. Wages of urban

workers were followed by a wage grade system, where seniority and education qualifications played

major role (Meng, Shen and Xue 2013, 228). Competition between workers was minimal, while there

was a growing product competition as SOEs firms could freely compete with each other. As the

product market competition increased, it affected the wage determination, because of the freedom of

the managers to set worker remuneration. Competition was no longer restricted since 1992, after Deng

Xiaou Ping’s “southern tour”, with the onset of trade liberalization (Appleton, Song and Xia 2014,

3), and economic boom, which increased labor demand in many cities. Therefore, attitude against

migrants started to become more flexible as urban economy could benefit from migrant labor (Brandt

and Rawski 2008, 173). In the 1990s the government made it legal for the SOEs, which were part of

the Chinese financial system (Wang, Wan and Yang 2014, 699), to become bankrupt and to fire

unwanted workers. In general, those workers shifted to private sector employment positions (Meng,

Shen and Xue 2013, 228).

After the major decentralization reform of the fiscal system in 1994, fiscal disparities between SOEs

have increased (Wang, Wan and Yang 2014, 699). This was the reason why, in 1995, the government

introduced an equalization grant to curb the fiscal disparity. Unfortunately, all the discretionary

transfers and the grants failed to redistribute resources. The reason being that the grants were used to

reward local governments loyal to upper levels of government, instead of targeting the poor provinces

(Wang, Wan and Yang 2014, 699). Moreover, in 1994, China passed the Labor Law, establishing a

unified legal framework for labor relations and the safeguarding of the employers rights. With the

labor regulations, “equal pay for equal work” was established and all workers obtained rest days and

holidays, safe working place environment, a minimum wage, social insurance and welfare (Brandt

and Rawski 2008, 173). Furthermore, were established a maximum of 8 hours of work per day and

40 hours per week, a specified overtime wage and a limited amount of overtime hours with a

maximum of 3 hours per day, or 36 hours per month (Ibid., 174).

Another big step regarding work conditions and rights was made in 1997, when the Chinese

government established a special one-time urban layoff program, called xiagang (Ibid.), which

implies that those workers who were not working were still retained by their original units with partial

Page 14 of 24

or no pay (Lee 2000, 914). Moreover, it provided up to 3 years of living subsidies together with

pensions and health care benefits, as well as training and job placement assistance (Brandt and Rawski

2008, 174). The government introduced this layoff system because, in this period, China faced with

large and unsustainable financial losses of SOEs. The creation of this system was to handle the

problem of excess workers in government’s SOEs (Lee 2000, 914). However, after sometimes, the

government lost control over the layoff, because of too many workers applying to it. Furthermore,

the government had problems because did not take to account that it needed to establish organizational

structures to manage the workers affairs and to help them to find a new employment while trying to

create new jobs (Lee 2000, 920).

Unfortunately, in the last decade some regional governments, with the aim to protect vulnerable urban

workers from job competition from migrants, started discriminatory employment regulations, such as

restricting migrants from working in specific occupations or by imposing high fees for the migrants

entering the city (Brandt and Rawski 2008, 175).

In 2000, the Chinese government launched the Great Western Development Strategy to challenge

regional divide, after some months another reform known as the socialist new countryside

development followed, made to reduce urban-rural gaps. Furthermore, they made the five- year plan

from 2006 to 2011, which was focused on building a harmonious society. More recent interventions

include expansion of social protection to the rural population, improvement of the living conditions

of migrant workers, and increases public funding for education and health services. During the Third

Plenum of the 18th Central Committee of the Chinese Communist Party, held in November 2013, a

systematic approach to improve income distribution through reforms in different areas was outlined,

such as social protection, access to public services, taxation, governance, and including the household

registration system (Wang, Wan and Yang 2014, 687).

From February 2004, the Chinese government recognized migrants as a key vehicle for increasing

the incomes of the farmers, and for this reason demanded the elimination of all restriction against the

migrants, and asked for equal treatment between migrants and urban residents. Unfortunately, the

implementation did not really work out (Brandt and Rawski 2008, 175).

Finally, in 2006 the government decided to remove the agriculture tax, as tax and subsidy payments

still favored urban residents (Wang, Wan and Yang 2014, 699). The populations, which were

migrating to the urban areas from the rural, were growing every year. From the data collected by

Page 15 of 24

Meng, Shen and Xue, in 1997 there were around 39 million rural migrant workers to the cities, and

by 2009 this had increased to 145 million (Meng, Shen and Xue 2013, 229). The increase in migrant

labor supply, made the urban labor force to shift from an unskilled production to service and clerical

occupations. This significant adjustment occurred due to the segregation of the labor markets between

urban Hukou possessors and migrant workers. Those who were in possession of urban Hukou were

protected from the labor market competition of the migrant workers and were paid a wage premium

as holders of urban Hukou (Meng, Shen and Xue 2013, 229).

China’s reforms were constantly focused on incentives, mobility, price flexibility, competition, and

openness (Brandt and Rawski 2008, 20).

1. Analysis

In this section, I am applying the chosen theoretical approaches - Glass ceiling and Sticky floor

metaphors and Discrimination theory in the labor market - to understand why because of the economic

reform in China gender wage gap appeared between the population. Confident that this analysis can

help me to point out the reason why segregation started in China.

The rapid economic growth and development of China has brought gender wage differentials and

gender discrimination. Discrimination in China already existed before Mao Zedong, while during his

era there was an egalitarian ideology, which encouraged equal pay between man and woman with

similar productivity characteristics. After the reforms and market transition, China was also

transformed from one of the most egalitarian countries in the world to one where there is a high level

of social inequality (Zhao 2012, 434). Moreover, after the reforms, local authorities and SEOs had

greater autonomy in wage setting. The decentralization of wage setting provided Chinese managers

with the ability to discriminate as they were allowed to choose their employees among those with

determined characteristics, which concerned mainly the employer's different levels of productivity.

Maurer-Fazio and Highes find that gender wage gaps in China were lower in the state sector than in

private sector after the reforms (Dong, Mason, et al. 2002, 158), while, Gustafsson and Li find that

in China between 1988 and 1995 the degree of wage discrimination increased (Ibid.). This was

confirmed by other two researchers, Blau and Kahn, which argued that women are disadvantaged

during the process of economic transition (Ng 2007, 160). Furthermore, Becker, relative to the U.S.

case, affirmed that the rapid growth of the federal government might have had important

consequences for discrimination against minority groups (Becker 1971, 135), which together with the

Page 16 of 24

previous argumentations, it is not only the case of federal government but it might be applied to all

rapid economic growth. In the case of China, the rapid economic growth started in 1980s,

contemporary with discrimination against women and other minority groups.

As affirmed by Becker, during the years discrimination changed. The situation he analyzed was

different from China’s, as he applied his theory to U.S. and in particular to discrimination against

Afro Americans. Regarding the transformation of discrimination during the years, he noticed that the

continual rise in the educational attainments of the population would be relevant if there was a

significant correlation between discrimination and educational level. While on the contrary, Arrow,

affirmed that another factor of discrimination might be education, which is directly connected with

how productive a worker is depending on his skills (Arrow 1971, 3). What made China’s government

focus on skills was the changes in complementary factors or technology thanks to the reforms.

China’s economic growth has been driven by extremely high rates of investment by the government

on physical capital. As an example, GFCF was 31% of GDP in 1988 and became 41% in 2007

(Appleton, Song, Xia 2014, 2). Appleton argued that this high accumulation of physical capital in

China during the reforms might be one of the reason why wage inequality rose. Technological

progress, such as computerization has characterized a growth in the need for skilled labor. In China

unskilled labor was the one abundant, as schools were closed during the Cultural Revolution, and

opened again only in 1977. Between 1980s and 1990s labor forces in urban areas increased

significantly, especially in tertiary degree (Meng, Shen and Xue 2013, 230). Because of the increase

in labor supply, urban workers which were more skilled than the migrants, switched to work in higher

positions, while migrants took the unskilled positions left by the urban workers (Ibid., 229). In the

1990s, after the wage grade system was adopted in China, competition between enterprises was free

and the employers had the right to set worker remuneration, which was based on seniority and

education qualifications (Meng, Shen and Xue 2013, 228).

It is well documented as argued by Ng that after the economic reform, regional disparities started in

China. Gender wage gap and discrimination against women in urban areas has been relatively low

compared to rural areas. In Chinese rural areas, because of the Confucianism ideology, women have

always been subordinated to men. Before and after the reforms their position and the discrimination

against them did not vary much. However, between 1988 and 1995, rural labor markets have been

liberalized and women were earning the same wages than men (Zhang, De Brauw and Rozelle 2004,

231). After the reforms, more job positions were created in the off-farm sector and Chinese women

Page 17 of 24

took advantage of it to move away from their households and from the subordination of their fathers,

husband, or brothers. In 1993 Wan found out that Chinese women were satisfied with their work in

off-farm sector, despite the fact that these jobs were far from home and involved working conditions,

which were be deplored in developed countries (Zhang, De Brauw and Rozelle 2004, 231). Analyzing

this situation through Berheide’s theory, he affirmed that when a woman gets a job normally the entry

point decides which career paths are open or blocked to her. In this case, women in off-farm sectors

went in through a very low position, and it will be very difficult to get a better job after. The happens

by looking at the situation of the Chinese women through the Sticky floor metaphor, which affirmed

that women most of the time find themselves stuck in a position where there is no possibility of

mobility or a better paid position and typically it is explained by sex-segregation positions (Berheide

2013, 826).

Urban inequality has been rising during the years, due to the presence of migrants. Before the 1980s,

there were tensions between the urban residents and the migrants as there were not enough jobs for

everyone (Brandt and Rawski 2008, 172) and, because of this, regional governments started

discriminatory employment regulations to protect the urban residents. (Ibid., 175). As argued by

Arrow and Becker, there is a possibility of discrimination not only by the employers but also between

employees or because of the employees. In the case of China, exists the possibility that the regional

governments did not start discriminating the migrants only to protect the urban workers. The

discrimination could have happened because there was a form of racism against migrants because of

cultural stereotypes or because employers were ignoring the real efficiency of the migrants. The same

can be applied to women moving from rural to urban areas for jobs in off-farm sectors. On the other

hand, after the economic boom, labor demand increased and urban economy started to benefit from

the labor of the migrants (Ibid., 173). Currently, migrants have some specific characteristics more

similar to urban residents, and which do not significantly alter the urban-rural gap, as most of them

are young, better educated compared to the average of rural residents of the past and with small

households (Wang, Wan, Yang 2014, 696). Moreover, thanks to recent interventions between 2006

and 2011, migrants and rural population started to benefit from social protection (Wang, Wan and

Yang 2014, 687).

Another problem for Chinese women, which appeared after the economic reform, is that they are

more likely than men to be laid off and forced into early retirement, indicating an influence by market

ideology (Dong, Macphail, et al. 2004, 980). Furthermore, this managerial discretion over

Page 18 of 24

employment might affect occupational segregation by gender, which is an important determinant of

gender differences in monetary compensation, and that it will affect gender differences in work

conditions (Ibid.). Regarding gender differences, Daniels affirmed in the Glass ceiling theory, that

women need to perform better than man, because it exists an explicit discrimination where men just

because of having a man name have a higher possibility to be hired. In the case of China, cultural

ideology appropriates certain jobs depending on the gender, which might be the same reason why

managers’ perception of productivity is associated to certain types of workers. Moreover, Becker

argued that most of the time employers do not hire a worker because they underestimate its economic

efficiency. For Becker, in contrast to Daniels, it does not depend on cultural stereotypes, but only

because employers are ‘ignorant’ of the worker true efficiency (Becker 1971, 16). While, as also

affirmed by Maurer-Fazio and Hughes, decentralization of wage decisions allowed managers to

compensate workers according to their productivity, providing managers with more freedom to

engage in discriminatory practices (Ng 2007, 148-149). Moreover, as argued by Berheide, these

cultural stereotypes and mobility barriers can prevent women from achieving organizational

opportunities. However, Becker argued that women would be hired only if they are productive as

men, because in this case it will not be costly for the employers to have a woman in the organizations

as she can work as much as a man (Ng 2007, 149). While Arrow affirmed that if there is a difference

in wage between workers or there is a specific group discrimination, the only explanation is that there

is a difference in productivity between the groups (Arrow 1971, 1). In 1984 in China, the government

changed the total quota system only between urban workers, and in 1986 it introduced labor contracts.

Thanks to both reforms, employers were able to freely select the most suitable workers and were free

to stabilize their salaries; therefore, they could give bonus to those employees who were more

productive than others. Ng, in 2007, found that between 1987 and 2004 gender wage gap grew faster

in those provinces where the reform was applied. This phenomenon, known as Sticky floor, which

was described in the theory chapter, is more common between those with a lower paid job.

Employers’ tastes is another aspect, which could help to understand why gender wage gap exist. This

phenomenon is described by Daniels as explicit discrimination, and it is the will of employers to hire

or not someone. While Becker explained that market forces is directly connected with employers’

tastes and together generate discrimination. Daniels affirmed that apart of explicit discrimination

there are other aspects, which determine why there is a difference between women and men at work,

such as perceptual biases and family demands. Women have a different role from men inside the

family, as they are taking care of the household and children, apart from working. This situation exists

Page 19 of 24

clearly in Chinese rural areas, while from my research I cannot affirm the same for urban areas. In

rural areas, Chinese women are working at home and taking care of husband and children apart of

working in the farm. As previously mentioned, this is a characteristic of Chinese culture and is part

of gender stereotypes. As affirmed by Zhang and Dong, as results from studies of wage discrimination

in the post-reform economy in China, Chinese women may endure more discrimination as the state

passed from an egalitarian society to a society influenced by Confucian patriarchal values (Zhang,

Dong 2008, 86), which discriminates women (Liu, Meng and Zhang 2000, 334). According to the

discrimination theory of Becker and Arrow, short-run discrimination is caused by personal tastes of

individuals, which can be found in cultural stereotypes. Employers, especially in private organizations

after economic reform, which have Chinese cultural background, might pay women employees less

than they might pay their male colleagues, even if they have similar productive characteristics. The

result from the Global Gender Gap Report of 2014 shows that in China the wage gap between women

and men is 35%. From the report, the estimate earned income of a Chinese woman in 2014 is 8.499

US$, while for a Chinese man is 13.247 US$ (Schwab, et al. 2014, 151). It is possible to see that

during the years the disparities between women and men did not change much, as Dong wrote that in

the post-privatization period men salaries was 34.7% more than the women salaries, despite the

finding that women were working almost two hours more per week (Dong, Macphail, et al. 2004,

988).

In China, women are more likely to be placed in occupations with no market involvement or decision-

making power (Dong, Macphail et al. 2004, 981). The reason is that the income generated by women

jobs increases their decision-making power within household (Zhang, De Brauw and Rozelle 2004,

232). As men are more likely to hold managerial occupations they have more “voice” than women as

affirmed by Dong, Macphail et al. Furthermore, after privatization, gender occupational segregation

and male-dominated shareholding leads increased in detriment to women, with male workers having

a stronger influence over decision-making than female workers (Dong, Macphail et al. 2004, 987).

Moreover, applying Daniels’ affirmations to the Chinese case, the existence of cultural stereotypes

and the following of Confucianism ideology makes women subordinate to men, and less suitable for

executive positions and, therefore, not a good investment for organizations. Another case where

Confucianism ideology can be found in China’s organizations system is regarding share ownership,

which might be more accessible to men than women, as men are more entitled, responsible, and as

argued by Daniels more competitive, assertive, self-reliant and ambitious (Daniels 2013, 331).

Moreover, share ownership is a result of household decision in the family structure, where women

Page 20 of 24

are subordinate to men. Husbands and sons are preferred members within the family to acquire

ownership. Dong argued similarly to Daniels, and affirmed that men are more capable of handling

sophisticated investments, and are more forceful than women when bargaining (Dong, Macphail, et

al. 2004, 982).

To conclude, in the last period Dong noticed that Chinese women were more likely to be employed

in production jobs than men, and in 2004 women were 80.6% while men were 66% (Dong, Macphail,

et al. 2004, 985-986), while women are less likely to be hired in sales and administrative occupations.

As previously mentioned, managers have preferences for certain groups of workers by gender,

however other characteristics could be age, marital status and residential status. As written before the

managers’ preferences are related to gender appropriateness to types of work and with gender

physical abilities. As an example, women are preferred workers in textiles, clothing and food

preparation, while men are preferred in steel products and farm tools (Ibid.).

Moreover, managers’ prefer young unmarried women because they are “not urdened by family life

and are easy to manage” (Ibid.). While others managers prefer married women because, “they are

stable and do not fear hardship”, and if these women have children older than three years it is even

better, because they do not have to worry about the problem of finding a substitute if they marry or

start a family (Ibid.).

2. Conclusion

This project is an attempt to analyze the gender wage gap after the economic reform in China. I

decided to focus on this subject because during my research I have found out the differences between

before and after the economic reform and I wondered why from perfect equality system, it turned to

be a system with earning disparities between genders and high discrimination against women in the

labor market. My project contains the following two theoretical approaches: Glass ceiling and Sticky

floor metaphors, and Discrimination Theory by Becker and Arrow. The two metaphors of the Glass

ceiling and Sticky floor are normally used in western countries to explain why discriminations against

women at work happen. Both metaphors were useful to analyze the situation in China, even if

normally are applied to more developed countries, where unfortunately inequality between genders

still exists. Together with these two metaphors, I have used the Discrimination theory by Becker and

Arrow as they were more focused on the labor market, than other theories about discrimination.

Page 21 of 24

By applying these theories on the Chinese situation, I could understand which aspects and topics

create discriminations and disparities between genders, and helped me to answer my problem

formulation: Why after the economic reform in China, the gender wage gap reappeared?

I can conclude that because of the Chinese cultural ideology, Chinese women face the metaphor of

the Glass ceiling, which stops their progression. Cultural stereotypes against women existed in China

for many years, but during the period under Mao Zedong’s power, because of the egalitarian system,

discrimination against women and other minorities was stopped because the government was not

permitting it. Therefore, after 1978, thanks to more freedom and liberalization of enterprises, the

stereotypes against women returned. Because of these stereotypes and the cultural ideology based on

Confucianism, women were considered subordinated to men, not a good investment for employers as

not as productive as men, and not good enough for share ownership. Comparing the Chinese situation

with the two metaphors used in the theory, I can affirm that the difficulties to find a job faced by

Chinese women after the economic reform were an outcome of inequality. Furthermore, of the

general characteristics explained by Daniels as causes of discrimination against women, some could

also be found in China. The first of them is having a female name even if they could be more or as

productive as men, while other characteristics were: education, experience, ability, explicit

discrimination, perceptual biases, and labor mobility, apart from lower salary. Chinese women were

still discriminated after the economic reform, even if after 1977 most of them were better educated,

as they had the possibility of attending university education level. Fortunately, not all employers

follow the Chinese cultural ideology, and women could find jobs off-farm, even if they work and live

in bad conditions. Another reason why Chinese women are discriminated at work is related to cultural

traditions. Chinese women take care of the house and the children. In the rural areas, traditions are

stronger, and women are still living in a position of subordination to the husband or brothers. There

are, of course, some exceptions, and as I wrote in the analysis chapter, some employers preferred to

hire married women, which already had children so they did not need to have free time to dedicate to

the family, as it would be for a just married young woman. The Glass ceiling and Sticky floor

metaphors were a good choice to apply to my project because they were useful as a basic theoretical

background for the understanding of the nature of discrimination against women at work. I can

conclude that discrimination against Chinese women existed even before the economic reform, but

analyzing the Chinese situation with the Discrimination theory, I could observe that the economic

reform in China created two institutional changes that had a big impact on gender wage

discrimination. The first one is decentralization or privatization, which removed central planning

Page 22 of 24

control by the government and created concurrence between enterprises, and the second one is market

competition. Even if in the last decades the Chinese government approved equal pay for equal work

in urban areas, and during the period between 1988 and 1995, in rural areas, men and women were

earning the same, I can affirm that because of privatization, gender discrimination grew. Privatization

has contributed to an increase in gender wage gap, gender wage discrimination, and contributed to

increase the income and wealth gap. Moreover, because of privatization, through the introduction of

share ownership, the subordination of women to men in the workplace has increased.

Throughout the project, I have acknowledged that to eliminate discrimination in a competitive

economy, governments need to legislate equal pay or gender equality in the workplace, such as it was

during Mao Zedong era.

Page 23 of 24

3. Bibliography

Appleton, Simon, Lina Song, and Qingjie Xia. "Understanding Urban Wage Inequality in China 1988 -

2008: Evidence from Quantile Analysis." World Development, 2014: 1-13.

Arrow, Kenneth. "The Theory of Discrimination." Discrimination in Labor Markets. Princeton: Princeton

University Press, 1971. 1-31.

Becker, Gary S. The Economics of Discrimination . Chicago: The University of Chicago Press, 1971.

Berheide, Catherine White. "Sticky Floor." In Sociology of work: An Encyclopedia, by Vichi Smith, 826-

828. Thousand Oaks: Sage Publications, 2013.

Brandt, Loren, and Thomas G. Rawski. China's Great Economic Transformation. Cambridge: Cambridge

University Press, 2008.

Daniels, Denise. "Glass ceiling." In Sociology of work: An Encyclopedia, by Vicki Smith, 330-332.

Thousand Oaks: Vicki Smith, 2013.

Dikötter, Frank. Mao's great famine. London: Bloomsbury Publishing, 2010.

Dong, Xiao-Yuan, and Paul Bowles. "Segmentation and discrimination in China's emerging industrial labor

market." China Economic Review, 2002: 170-196.

Dong, Xiao-Yuan, Andrew Mason, Scott Rozelle, and Linxiu Zhang. "Gender wage gaps in post-reform

rural China." Pacific Economic Review, 2002: 157-179.

Dong, Xiao-Yuan, Fiona Macphail, Paul Bowles, and Samuel P.S. Ho. "Gender Segmentation at Work in

China's Privatized Rural Industry: Some Evidence from Shandong and Jiangsu." World

Development, 2004: 979-998.

Lee, Hong Yung. "Xiagang, the Chinese style of laying off workers." University of California Press, 2000:

914-937.

Liu, Pak-Wai, Xin Meng, and Junsen Zhang. "Sectorla gender wage differentials and discrimination in the

transitional Chinese economy." Journal of Population Economics, 2000: 331-352.

Maurer-Fazio, Margaret, and James Hughes. "The Effects of Market Liberalization on the Relative Earnings

of Chinese Women." Journal of Comparative Economics, 2002: 709-731.

Meng, Xin, Kailing Shen, and Sen Xue. "Economic reform, education expansion, and earnings inequality for

urban males in China, 1988 - 2009." Journal of Comparative Economics, 2013: 227-244.

Ng, Ying Chu. "Gender Earnings differentials and regional economic development in urban China, 1988-

97." Review of Income and Wealth, 2007: 148-166.

Page 24 of 24

Orvidas, Ken, and Andrea Scarlatelli. Echinacities. September 29, 2011. http://www.echinacities.com/expat-

corner/Feminism-and-the-Wobbly-Bridge-to-Gender-Equality-in-China (accessed January 01, 2015).

Schwab, Klaus, et al. The Global Gender Gap Report 2014. Cologny/Geneva: World Economic Forum,

2014.

Wang, Chen, Guanghua Wan, and Dan Yang. "Income Inequality in the People's Republic of China: trens,

determinants, and proposed remedies." Journal of Economic Surveys, 2014: 686-708.

Werhun, Cherie D. "Glass ceiling." In Encyclopedia of Women in Today's World, by Mary Zeiss Stange,

Carol K. Oyster and Jane E. Sloan, 625-627. Thousand Oaks: Sage Publications, 2011.

Zhang, Linxiu, Alan De Brauw, and Scott Rozelle. "China's rural labor market development and its gender

implications." China Economic Review, 2004: 230-247.

Zhang, Liqin, and Xiao-Yuan Dong. "Male-female wage discrimination in Chinese industry. Investigation

using firm-level data." Economics of Transition, 2008: 85-112.

Zhao, Wei. "Economic inequality, status perceptions, and subjective well-being in China's transitional

economy." Research in Social Stratification and Mobility, 2012: 433 - 450.