Introduction

Urban China was an egalitarian society in the 1980s and even the early 1990s. Income inequality among urban residents was extremely low compared to other developing countries (Adelman and Sunding 1987; Khan et al. 1992; Gustafsson and Li 1998). Wage inequality among urban workers was also very low (Knight and Song 1993). In explaining total inequality of earnings in urban China the gender gap in earnings between urban male and female workers was observed as relatively unimportant compared to other explanatory variables such as ownership structure, economic sector, and location (Knight and Song 1993; Gustafsson and Li 2000). The narrow gender gap was related partly to the implementation of a full employment policy, which was firmly considered as an advantage of the socialist system, and partly to a political ideology that emphasized equalizing earnings between male and female workers.

Since the mid-1990s urban reforms have speeded up in terms of reconstructing urban industries and enterprises, changing the employment system and retirement arrangements, and remodeling social security. As a result of implementation of the xiagang (layoff) policy, large numbers of urban workers have been laid off and have become unemployed or xiagang workers. At the same time, some early retirement programs were introduced to reduce redundant workers in enterprises. Several studies examine the number of unemployed and xiagang workers and the adverse consequences they have encountered after being laid off, such as difficulties becoming reemployed and their reduced wages upon being reemployed (for examples, see Appleton et al. 2002; Knight and Li 2002).