ABSTRACT
Off-farm employment has grown rapidly since China launched its economic reforms in the late 1970s andworking off the farmhas played an increasingly important role in China’s rural economy. Earnings from the average rural worker’s off-farm employment now account for 39 percent of the net income of rural households (Ministry of Agriculture of the People’s Republic of China [MOA]2009).Theexpansionof off-farmemployment alsohashelped transition China’s economy from one dominated by agriculture to one
ABSTRACT
KEYWORDS
INTRODUCTION
Off-farm employment has grown rapidly since China launched its economic reforms in the late 1970s andworking off the farmhas played an increasingly important role in China’s rural economy. Earnings from the average rural worker’s off-farm employment now account for 39 percent of the net income of rural households (Ministry of Agriculture of the People’s Republic of China [MOA]2009).Theexpansionof off-farmemployment alsohashelped transition China’s economy from one dominated by agriculture to one
focusedon industry and services (AlandeBrauw, JikunHuang, ScottRozelle, Linxiu Zhang, and Yigang Zhang 2002). Because of the importance of off-farmemployment, it is not surprising that
when the global financial crisis threatened to affect production in factories and, in turn, the number of jobs available to rural workers across China, the nation’s leaders were quick to recognize that this might lead to a social, as well as an economic, crisis. Of China’s more than 500 million-strong rural labor force, 265million people are estimated to have held paid off-farm jobs in the mid 2000s (Linxiu Zhang, Xiaofei Li, Scott Rozelle, and Jikun Huang 2009). Of these, more than half left their homes to engage in paid work in the factories and in the service sector in large municipalities and along China’s eastern coast (Sherry Tao Kong, Xin Meng, and Dandan Zhang 2009). What would happen if too many of China’s rural laborers lost their jobs? Many authors have begun to examine the impact of the financial crisis
on workers in China. For example, Fang Cai and Kam Wing Chan (2009) analyze the impacts of the global economic crisis of 2008-09 on the job security of migrant workers. The authors estimate that 23 million workers became unemployed within the rural migrant labor force by March 2009. They also point out that there was quick recovery, suggesting it was due, in part, to the strong response from the government. Xuebin Chen and Mingdong Xu (2010) examine the direct impact of the financial crisis on international trade and show that the crisis had a substantial negative impact on China’s imports and exports. Since a large share of the migrant labor force works for earnings in export-oriented factories, the crisis affected workers in this sector. In one of the only papers that uses primary data, Jikun Huang, Huayong
Zhi, Zhurong Huang, Scott Rozelle, and John Giles (2010) find that the global financial crisis had a large impact on rural off-farm employment in China. According to their estimates, by April 2009 there was a 6.8 percentage point difference between off-farm employment under a “business as usual” (BAU) scenario and actual off-farm employment. Monthly wages were also found to have declined. While 49 million people were laid off between October 2008 andApril 2009 (more than 17 percent of those that had an offfarm job in September 2008), nearly half of those were re-hired in off-farm jobs by April 2009. Furthermore, among those who were laid off and did not find a new job by April 2009,most of themwent back to the village and found paid work on the farm or unpaid work at home. The flexibility of China’s rural economy, an economy in which almost all households have access to contracted land, made possible some form of employment for those laid off from their off-farm jobs. This helped avoid the instability that could have occurred if high unemployment rates had persisted. While the story of what happened in China during the global financial
crisis is becoming clearer, as yet, no one has examined the gender
dimensions of the crisis, despite more general concerns among scholars regarding women’s employment in China. Evidence from China’s recent economic transition suggests that women may have been more vulnerable than men to the types of employment shocks induced by the global crisis. Indeed, an extensive empirical literature shows that women were disproportionately affected by the dismantling of the planned economy in China during the 1980s and 1990s. Several studies, including those by Simon Appleton, John Knight, Lina
Song, andQingjie Xia (2002), John Giles, Albert Park, and Fang Cai (2006a, 2006b), Xiao-yuan Dong, Jianchun Yang, Fenglian Du, and Sai Ding (2006), andGünseli Berik, Xiao-yuanDong, andGale Summerfield (2007), find that women disproportionately bore the brunt of job losses and layoffs during the period of economic restructuring, especially following large-scale labor retrenchment that took place during 1997. Older women were particularly affected (Margaret Maurer-Fazio 2006), as women were more likely than men to be subject to forced early retirement (Giles, Park, and Cai 2006a). Once out of the labor force, women exhibited longer unemployment durations and lower reemployment probabilities, due in part to weaker social networks and unequal entitlements to re-employment services (Jieyu Liu 2007; Fenglian Du and Xiao-yuan Dong 2009).1 And, when they did reenter the labormarket, women were less likely thanmen to recover jobs of the same quality as before – for instance, those with benefits such as health insurance (Giles, Park, and Cai 2006a). Lastly, this economic restructuring increased gender wage gaps. Much has changed in China’s economy since the start of the economic
transition and the period of economic restructuring of the late 1990s. Along with historic rates of economic growth and poverty reduction, China’s economy has diversified dramatically, and so have off-farm employment opportunities for women. In fact, the recent rapid expansion of off-farm employment has brought with it a considerable narrowing in gender gaps in access to off-farm employment, particularly among younger cohorts of women (Linxiu Zhang, Alan de Brauw, and Scott Rozelle 2004; Zhang et al. 2009). In this context, we might expect women to have been disproportionately affected by the crisis in the same way that the evidence indicates they were during economic restructuring. Analytically, there are several reasons why one would expect to see gender-
differentiated impacts of the global crisis. First, to the extent that women and men workers are concentrated in different occupations and sectors – and different sectors are affected differently by a shock – one would expect to see them affected differently by the crisis. Second, employers may treat women and men differently with respect to hiring and firing. Global evidence suggests that women workers are often laid off earlier and in greater numbers than men in the wake of shocks to labor demand (WorldBank2001).2 Third, theway that households adjust their labor supply
dimensions of the crisis, despite more general concerns among scholars regarding women’s employment in China. Evidence from China’s recent economic transition suggests that women may have been more vulnerable than men to the types of employment shocks induced by the global crisis. Indeed, an extensive empirical literature shows that women were disproportionately affected by the dismantling of the planned economy in China during the 1980s and 1990s. Several studies, including those by Simon Appleton, John Knight, Lina
Song, andQingjie Xia (2002), John Giles, Albert Park, and Fang Cai (2006a, 2006b), Xiao-yuan Dong, Jianchun Yang, Fenglian Du, and Sai Ding (2006), andGünseli Berik, Xiao-yuanDong, andGale Summerfield (2007), find that women disproportionately bore the brunt of job losses and layoffs during the period of economic restructuring, especially following large-scale labor retrenchment that took place during 1997. Older women were particularly affected (Margaret Maurer-Fazio 2006), as women were more likely than men to be subject to forced early retirement (Giles, Park, and Cai 2006a). Once out of the labor force, women exhibited longer unemployment durations and lower reemployment probabilities, due in part to weaker social networks and unequal entitlements to re-employment services (Jieyu Liu 2007; Fenglian Du and Xiao-yuan Dong 2009).1 And, when they did reenter the labormarket, women were less likely thanmen to recover jobs of the same quality as before – for instance, those with benefits such as health insurance (Giles, Park, and Cai 2006a). Lastly, this economic restructuring increased gender wage gaps. Much has changed in China’s economy since the start of the economic
transition and the period of economic restructuring of the late 1990s. Along with historic rates of economic growth and poverty reduction, China’s economy has diversified dramatically, and so have off-farm employment opportunities for women. In fact, the recent rapid expansion of off-farm employment has brought with it a considerable narrowing in gender gaps in access to off-farm employment, particularly among younger cohorts of women (Linxiu Zhang, Alan de Brauw, and Scott Rozelle 2004; Zhang et al. 2009). In this context, we might expect women to have been disproportionately affected by the crisis in the same way that the evidence indicates they were during economic restructuring. Analytically, there are several reasons why one would expect to see gender-
differentiated impacts of the global crisis. First, to the extent that women and men workers are concentrated in different occupations and sectors – and different sectors are affected differently by a shock – one would expect to see them affected differently by the crisis. Second, employers may treat women and men differently with respect to hiring and firing. Global evidence suggests that women workers are often laid off earlier and in greater numbers than men in the wake of shocks to labor demand (WorldBank2001).2 Third, theway that households adjust their labor supply
during an economic downturn can also contribute to gender-differentiated impacts of crises in the labor market. Under some circumstances, such as when men disproportionately lose their jobs, women who do not engage in paid work may try to enter the labor force in an attempt to protect their families from income or employment shocks.3 In contexts where jobs are scarce – particularly where women are seen as secondary workers – women may actually exit the labor force, ceding remaining jobs to so-called male breadwinners.4 Finally, the nature of government crisis-response policies (for example, safety nets and economic stimuli) can affect the gendered impact of an economic crisis. Recent evidence from other countries in East Asia suggests that these
different factors can combine to produce different gender impacts in different economic and social contexts. New analysis of the gender impacts of the 1997-98 East Asia crisis in Indonesia finds, for example, that women workers often faced higher employment and wage cuts than their male colleagues within a given firm (Mary Hallward-Driemeier, Bob Rijkers, and Andrew Waxman 2011). In aggregate, however, male workers were more adversely affected by the crisis, as differential treatment effects within firms were more than offset by the fact that male workers were disproportionately employed in the firms hardest hit by the crisis. Evidence from Cambodia highlights considerable labor market churning as a result of the global financial crisis, where destruction of jobs was followed by an even larger creation of lower-quality employment in the informal and agricultural sectors (Lucilla Bruni, Andrew D. Mason, Laura Pabon, and Carrie Turk 2011). While women workers experienced the greatest share of job losses during the crisis, they also experienced the largest share of employment gains as women joined the labor force or moved from unpaid to paid activities in an attempt to protect family income. So, werewomenworkersmore adversely affected thanmenworkers during
the recent global financial crisis? Did women suffer layoffs (from their offfarm jobs) at higher rates than men? For those who remained employed off the farm, did the wages of women fall more or less than those of men? Given the various factors at play, these questions need to be answered empirically. We try to understand whether the global financial crisis has had a greater adverse effect on women than on men in the context of China. To meet this general goal, we have three specific objectives. First, we
document the trend in off-farm employment between 2000 and 2008 by gender. This helps us establish a BAU scenario, a counterfactual of what men and women’s off-farm employment would have been in the absence of the global financial crisis. Second, we estimate the gender impacts of the financial crisis on off-farm employment by comparing the differences between the actual off-farm employment rate of men and women workers and the off-farm employment rate, by gender, under the BAU scenario. Third, we examine the profiles of thosewhoweremore likely to be negatively
affected by the crisis. In particular, we analyze whether women were more likely than men to be laid off during the crisis. Through these analyses, we aim to provide policymakers inside and outside of China with an accurate, empirically based view of the gender dimensions of the global financial crisis in China’s rural labor market.
