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.
Jong-Wha LEE, Dainn Wie, Wage Structure and Gender Earnings Differentials in China and India, World Development, Volume 97, 2017, 313-329
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