Change in Gender Wage Gaps: China vs India

Since the 1990s, China and India have experienced huge social and economic transformation, resulting in two powerful and unique economies. Through this transformation, there has been a dramatic change in wage gaps within the two economies as the labor market develops. As the labor market changes, new skills and education becomes necessary for the workers; different genders and demographics begin to develop different skills as they search for employment in their changing economies. For such large underdeveloped economies, rapid change often means low skilled, and uneducated demographics can face great hardship and loss of employment as industries change and labor market demand develops.

Although India and China have developed over a similar time frame and both share large populations, those populations are very different, and the countries, starting from very different situations, developed very differently from each other, leaving lasting consequences and questions as this rapid growth continues.

The following graphs, panel A and b (Jong-Wha 318), present and depict the similarities and differences in China and India’s development and the consequences and effects on women’s Labor Force Participation Rate (LFPR) and educational  attainment. China started from a position of relatively high equality for an underdeveloped nation with women participating at almost 85% and maintaining a relatively high level of education in 1988. As china’s economy develops, women’s LFPR falls greatly, and educational attainment of those working increases.

India’s economy and labor market develops differently than China. India starts at one of the lowest women’s LFPR in the world, under 20%, and we see slight growth in the early 2000’s but a relatively stagnant rate. Interestingly, education expands similarly to China, with illiteracy rates for urban female workers at about half of what it was in the 1980’s. Not pictured on these graphs is the actual wage rate in China and India. The average wage for females in China decreased from about 85% in 1988 to about 72% of the average male wage in 2009. However, in India, the average real wage for females increased from 68% in 1988 to about 82% of the average male wage in 2010 (Jong-Wha 316).

These significant differences in development reveal how culture and economies and react and change with or sometimes against each other. China and India’s developing economies both similarly place higher value on education; differences then arise in how the labor market can react to knew demands for more skill and education. Women in India seems to be able to meet this demand and pursue further educational attainment and receive higher wages, where as Chinese women seem to be facing more obstacles in meeting new labor market demands and have in turn been leaving the labor market or accepting lower pay. These developments will continue to become more significant as these economies grow and expand. India seems to be trending towards higher educational attainment and a smaller pay gap, but their culture of low female LFPR seems to be strong. China is trending in a more negative direction, with educational attainment becoming more significant, and obstacles to female pay equity and equality of employment seem to be growing as more and more women leave the labor force.

Source:

 

Jong-Wha LEE, Dainn Wie, Wage Structure and Gender Earnings Differentials in China and India, World Development, Volume 97, 2017, 313-329
https://doi.org/10.1016/j.worlddev.2017.04.016.

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10 Responses to Change in Gender Wage Gaps: China vs India

  1. herndono20 says:

    It is interesting see the difference in LFPR between the two countries as their economies develop and education becomes more important. It seems that as China becomes more educated not only do they more involved in the global economy, but men are starting to push women out of the labor force. India experienced an opposite trend as they become more educated and involved, but still have a male dominated work force. I would have assumed that as the countries become more educated as a whole that the gender wage gap would decrease. China and India reformed their economies to a more market-oriented front, which could be the cause of women working less. Maybe employers see these new industries to be more fit for men. Based on this article women seem to have the education but not the right skills.

  2. Banks Pflager says:

    It is extremely interesting how different the cultures for India and China are compared to our culture in The United States and then trying to analyze how that affects the economy. In recent times, the wage rate of women is decreasing in those countries while we are working hard to increase the wage rate of women compared to men in the United States. The impact that this difference has on the economy is something that should be noted. We can learn from an economic standpoint how an increasing rate of women in the labor force and more diverse group of people participating in the labor force helps our country. As economies change, it is important to understand why they are changing and these graphs are something we can look at to point out these differences.

  3. John Gaugin-Rosenthal says:

    As China and India transitioned to free-market economies and pursued economic integration into the international system, competition among firms and within the labor market soared. Competition paved the way for higher wages and more competitive prices for goods and services. As an economy develops, families achieve higher quality of life and women may be able to childbear while remaining at home. In the United States, that is a major reason for labor force discrimination. Firms are extremely competitive and will thus hire workers who will remain with the firm for many years to come (training new workers is costly, so firms avoid that). When women take maternity leave, they may lose job experience and take up a spot on the payroll that could otherwise be occupied by someone who is generating revenue. Perhaps that occured in China and India as well? I am unfamiliar with their cultures so I cannot assert that they have similar values and traditions with regard to women in society.

    Perhaps, as each economy developed and jobs were made prevalent, men – who had been given priority access to education – had skills that made them more desirable in the labor market.

    What are the current rates? Are these trends reversing in China or India?

  4. Chris DuPont says:

    I think it’s interesting to analyze this part of the cultures of both India and China because it’s a part which we don’t often look at and even realize. These figures and statistics are alarming coming from the culture of the US where the women’s LFPR is extremely different to these underdeveloped countries. In some ways, what’s happening in those countries is in stark contrast to the developments currently occurring in the US, including how the wage rate is significantly decreasing while here in the US the country as a whole is actively trying to combat this wage gap. I think these countries should look to the United States as a model for women’s education and LFPR, which would hopefully greatly help and influence their economic development, as well as the well-being of their citizens as a whole.

  5. wonderlicc18 says:

    For future research, I would like to see how these demographic differences in educational attainment and labor force participation measure up in cities. Intuitively, it would seem like the cities in both China and India are where development is really most apparent. Therefore, I’d be keen to know more urban life: how people get around, where people live in relation to commerce, how many people per household, etc. These figures might give us a better look at the process of improving your situation from the perspective of an actual Chinese/Indian person. In other words, the changing conditions might be best observed in the midst of the most visible growth.

  6. Ezequiel Piantoni says:

    Even when the percentage of the women in the workforce in China with tertiary education increased from approximately 5% in 1988 to 25% in 2009, the average wage decreased from 85% to 72% of that of males’ in the same period. This could potentially show an unfair distribution of income between genders. But before making this claim, I would like to see the same data for men. How did the men workforce change between 1988 and 2009? What percentage of them had tertiary education in 1988 and in 2009? If the data shows that men did not increase their education and skills at a faster rate, then there is clearly an unfair distribution of income between both genders in China.

  7. ahny19 says:

    The equal employment and pay among working age men and women in pre-reform China was striking particularly in the context of a gender wage gap in high-income countries. Although India’s stagnant female labor participation rate and gender wage gap persisted for decades, it was interesting to observe the country’s increase in average real wage for women from 68% of the average male wage in 1988 to 82% in 2010. Despite both developing economies attaining increased skill levels among female workers after reform, Lee and Wie attribute China’s widened gender gap to gender-specific factors such as unobservable labor market qualifications and increased discrimination, particularly against low and middle-skilled workers. Yet, gender-specific factors and relatively high wage gains of female workers reduced the wage gap in India.

    Lee and Wie argue that unobserved skills and gender-specific factors such as discrimination against women should have a place in public policy for labor market inclusiveness. This makes me consider the U.S. labor market and the potential instances of labor market discrimination; one source of discrimination against women in the labor force could be maternity leave as women have the right to temporary absence during the period before and after childbirth. Despite the U.S. having one of the shortest periods of maternity leave in the industrialized world, it could be a possible source of discrimination against women in the labor market.

  8. rietanob18 says:

    Great post on a very interesting topic about gender inequality around pay — especially fitting given the amount of attention this topic has received in the United States in the past few years. One additionally interesting consideration that could play into this blog post comes in the form of changes centered around technology and AI. Both men and women in the United States, and of course other nations, are being forced to change from their old unskilled jobs and instead adapt and find new work. For example, something that we are all familiar with is that companies like CVS Pharmacy and Wal-Mart, inc. have set up automated checkout systems that eliminate the need for cashiers. Additionally, Amazon GO, an exciting new grocery store in which customers don’t even need to checkout with a person or an automated system, launched today (https://www.wsj.com/articles/amazons-cashierless-go-convenience-store-set-to-open-1516546801). As technology allows for advancements such as these, the need for and demand for education will rise, and workers of all genders will be forced to become more skilled across every industry. It seems that while technology has great benefits for economies, it also offers challenges for the people of nations that it is supposed to benefit.

  9. the prof says:

    I’d need to read their study but in the background are two structurally different economies. India remains overwhelmingly rural and is relatively young. China is perhaps 55% urban and is now at the point where the working age population (that of Panel A) is shrinking. I’m not sure how to interpret the graphs, not knowing for sure what the denominator includes.

    One note in passing: China is far ahead of the US in the ability to use cell phones to make small payments. However, remember that self-checkout is capital intensive. While China is no longer abjectly poor, it still may not be cost effective to automate in that manner. But I’ve been in small stores that do use barcodes for everything, but that contributes to record keeping and brings other benefits, such as conveying that prices are fixed rather than negotiated.

  10. pezzij19 says:

    The subject that struck me the most and seemingly the other students as well was the relative decrease in Chinese women’s LFPR. There have been some guesses for why this has happened, all conceivably possible. My initial thought is this: Because a good portion of the Chinese economy was agricultural and a good deal of the population lived in rural areas, the women in a family may have been needed in order to competently operate a farm or business. And now with industrialization, there is more disposable income, and fewer farmers, which may have enabled women to work less. Not that this is what should happen, but perhaps the culture in China would prefer the mothers to be caregivers and worked out of necessity, and now that circumstances are changed, they are no longer required to work in the formal sector.
    It is possible that India is in the next step where more women are encouraged to work as the country has improved their institutions and grown their economy. Possibly China will follow.

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