Inclusion and Gender Equality in China

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1 Inclusion and Gender Equality in China 12 June 2017 Disclaimer: The views expressed in this publication are those of the authors and do not necessarily reflect the views and policies of the Asian Development Bank (ADB) or its Board of Governors or the governments they represent. ADB does not guarantee the accuracy of the data included in this publication and accepts no responsibility for any consequence of their use. The mention of specific companies or products of manufacturers does not imply that they are endorsed or recommended by ADB in preference to others of a similar nature that are not mentioned.by making any designation of or reference to a particular territory or geographic area, or by using the term country in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.

2 Key References Inequality in China Trends, Drivers and Policy Remedies (ADB/IMF, forthcoming) Gender Equality and the Labor Market Women, Work and Migration in the People s Republic of China (ADB/ILO, forthcoming) 2 2

3 Outline Poverty Reduction and Inequality in China Gender Perspective Key Lessons for Policy 3 3

4 Inequality in China China s Gini coefficients, Regional Comparison of Income Inequality Levels (Net Gini Index; in Gini Points; year of 2015 (or latest available); average across the region) Ravallion and Chen (2005) National Bureau of Statistics Sources: Zhuang and Shi (2016) Sources: SWIID Version 5.1; and IMF staff calculations Note: ASEAN = Association of Southeast Asian nation; LIC = low-income county; NIE = new industrialized economy; OECD = Organization for Economic Cooperation and Development 4

5 Poverty Reduction in China Growth Incidence of Income by Decile (Percent per annum) Poverty headcount ratio at $1.90 a day (2011 PPP, percent of population) Sources: Piketty et al (2016) Sources: Poverty and Equity Database, World Bank 5

6 Does Inequality matter? Labor Force Participation and Productivity Growth (in percent) Low Labor Productivity Levels (Percent of OECD Labor Productivity; year of 2012) Labor Productivity Growth Labor Force Participation (RHS) Sources: CEIC; World Bank Sources: OECD; staff calculation 6

7 Equality of Opportunity and Access Matters (Not just an equity issue) Gaps in Tertiary Education Completion (Age 25-29, difference in percentage points) Access to Financial Services (Percentage points) Sources: World Inequality Database on Education (WIDE) Notes: Regional gap refers to the difference between the region with the highest and lowest tertiary education completion rate. Wealth gap refers to the difference between the top and bottom quintile. Major emerging markets = Chile, Mexico, Brazil, India; Major advanced economies = Canada, France, Germany, Italy, UK, US. Sources: Word Bank, Global Findex Data base Notes: Major emerging markets = Brazil, India, Chile, Mexico; Major advanced economies = Canada, France, Germany, Italy, Japan, UK, US. 7

8 Location Still Matters Income Inequality Decomposition 1995, 2007, and 2013 (Share of total, in percent) 60 The Ratio of Urban-Rural per Capita Household Disposable Income, (In percent) , , , , Education Rural/Urban Province Sources: CHIPS Household Surveys; staff calculation Sources: CEIC 8

9 Outline Poverty Reduction and Inequality in China Gender Perspective Key Lessons for Policy 9 9

10 Why focus on Gender? Canary in the coal mine : Migrant women at bottom of ladder Gender studies reveal: Earnings gaps Earnings discrimination Inequality Analysis Framework Endowments Capability / fortune Return on Endowments 10

11 Market Transition and Gender Hiring discrimination Increased wage gaps Market transition (Planned to Market) SOE to Private employment Administrative to Market mechanism Increased wage discrimination Increased motherhood penalty Gender gaps (entrepreneur gaps, professionals, senior managers)

12 Structural Transition and Gender Women in lower paidsectors Structural Transition Agriculture to Industry Rural-Urban Migration Rise in informal employment Gender gaps in informal employment Migrant women at bottom of ladder

13 Growth Transition and Gender Women in lower paidsectors Growth Transition Employment shift to services Lack of protection and representation ( voice ) Women in more vulnerable employment 13 13

14 Demographic Transition and Gender Intensification of unpaid work Demographic Transition Increased elderly dependency rate Reduced participation in paid work 14 14

15 Gender Norms in China Preference for Sons (Men) High Male-Female sex ratio Lower Female Educational Attainment (historically). Higher burden of Unpaid Work Glass Ceilings/Sticky Floors for women. Gender sensitive policies: Employer-provided social services. State-care services Hukou Labor laws and protections 15

16 Gender Norms in China Structure public institutions and systems - Hukou (gendered pattern of migration) - Laws - Policies - Services Society Gender Norms Work Place Structure and reward work across sectors - Human capital; incorporation into the labor market - Hiring and promotion - Legal protection - Voice at work Household Assign women greater responsibility for unpaid domestic work Gender Norms Gendered values, beliefs, and attitudes affecting roles, behavior, work, and resources 16

17 Shift from Administrative to Market System Issues Market transition Change in employment/wage setting Impact Market system more sensitive Endowments Policy distortions Biases Increased wage differentiation across endowments Increased wage discrimination Revealed biases in access 17

18 Access to Social Services Issues Market Transition Employer-provided services Impact Restricted access to Social Services affects return on endowments Gender bias in unpaid work Hukou System Access to urban social services Labor force participation Access to economic opportunities Wage discrimination Employment discrimination Demographic transition Rising burden of elderly care Two-child policy 18

19 Labor Market Segmentation Issues Structural transition Rural-urban migration Hukou Residency status Tax system High tax rates on formal employment for low income Coverage of labor laws Contracts labor standards Growth transition Shift to less formal service sector 19 Impact Labor market segmented Migrants less likely to have access to formal contracts Weak labor protection in informal sector, weaker access to social security Migrants face large decent work deficits Women migrants at the bottom of the ladder

20 Outline Poverty Reduction and Inequality in China Gender Perspective Key Policy Lessons 20 20

21 China Mexico Israel Turkey Luxembourg Italy Austria Chile United States New Zealand Greece United Kingdom Slovak Republic France Sweden Switzerland Finland Hungary Australia Norway Denmark Spain Korea Portugal Poland Germany Estonia Czech Republic Latvia Netherlands Belgium Slovenia Japan Ireland Continue to Invest in Education Cross-Country Comparison of Spending (percent of GDP) Cross-Country Education Attainment (Enrolment rate, percent in same age group, 2014) China EM Asia EMs OECD Social Assistance Health Education year-olds year-olds 0 Sources: Expenditure Assessment Tool; CEIC; staff calculations Sources: OECD 21

22 Continue to Increase Social Spending Cross-Country Comparison of Spending (percent of GDP) Distributions of Hospital Beds per 1,000 population 8 China EM Asia EMs OECD Social Assistance Health Education Sources: Expenditure Assessment Tool; CEIC; staff calculations Sources: CEIC; IMF staff calculations 22

23 Use Tax Reform to Promote Inclusive Growth China (19% of GDP) Tax Revenue Composition OECD (25% OF GDP) 8% 10% 5% 6% 2% 24% 20% 42% 26% 15% 9% 33% Sources: CEIC, OECD, staff calculations 23 23

24 Continue to Pursue Regional and Rural Development GDP Composition by Region (Percent of aggregate 5 year nominal GDP) Annual Growth of Regional GDP (In percent) East Central West Northeast Sources: CEIC; Staff calculations - West Central East Northeast Sources: CEIC; Staff calculations 24

25 Tackle Distortions Access to Social Services Excessive Marginal Tax Rate Hukou system PIT+SSC Average Tax Rate by Income Quantiles (In percent of labor income, Urban HH2012) 300 million new migrants to urban areas expected in the next two decades Equal entitlements to avoid segmentation 25

26 Tackle Biases Industrial segregation Occupational segregation Under-representation Glass Ceilings Equal Opportunities Gender education gap Training and vocational education Gender-neutrality/positive discrimination Access to finance, information, networks 26

27 Expand Labor Market Protection Enforce the New Labor Contract Law Access to social protection schemes Ensure workplace protection for all workers including women 27

28 The Good News: Many Reforms Underway Tax reform Regional development Labor market policies Pro-farmer policies Dibao system Fiscal transfers Social security 2020 Poverty Eradication Goal 28

29 Xie, Xie! 29

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