Introduction

China has been transitioning from a planned economy to a market economy for three decades. Since the mid-1990s when the urban reforms were implemented in earnest, wage inequality has widened (Appleton et al. 2002; Knight and Song 2008). During the period of the planned economy, one of the objectives of the Chinese government that was supported ideologically by Mao was to narrow the gender-wage gap. As a result, urban China boasted a smaller wage gap compared to other countries (Gustafsson and Li 2000). The economic transition has had an effect on the gender-wage gap through development of the private sector and the granting of more autonomy to state-owned enterprises to hire and fire employees and to determine wages. Given the pre–labor-market discrimination against women in terms of educational attainment, female workers were more concentrated in occupations requiring unskilled workers with low human capital. With the great flow of rural migrant workers, particularly unskilled female workers, into the cities and female workers facing much more severe competition in the urban labor market, wages have been depressed and the gender-wage gap has increased.

This chapter investigates changes in the gender-wage gap since the mid-1990s using the household survey data collected for 1995, 2002, and 2007. It should be noted that there were two shocks to the labor market in urban China during this period. One shock was the economic restructuring of urban enterprises, during which time a majority of the state-owned and collective enterprises were privatized or restructured. As a consequence, millions of urban workers in the state-owned and collective sectors were laid off. The number of employees in state-owned enterprises (SOEs) decreased from 112.6 million in 1995 to 71.6 million in 2002, and this number declined further to 64.2 million in 2007.