Women's Employment and Family Income Inequality during China's Economic Transition

Economic reforms and trade liberalization have brought profound changes to the Chinese labor market. In this paper, we apply the technique of decomposing the coefficient of variation to examine the impact of changes in married women's employment and earnings on income inequality among Chinese urban households. Using the Chinese Household Income Surveys from 1988, 1995, and 2002, we explore the differences between two phases of economic transition: the gradualist reform period (1988-1995) and the radical reform period (1995-2002). Our analysis shows that the public-sector labor retrenchment of the late 1990s has led to a drastic decline in the employment rates of women, especially those married to low-earning husbands, and the change in women's employment was a major force driving income inequality in post-restructuring urban China.