Does an Entrepreneurial Career Pay for Women in China?

Abstract

Using data from the Chinese Household Income Project survey in 2013, our male–female pay‐gap decomposition illustrates that the gender earnings gap is larger among the self‐employed than the wage‐employed after controlling for the effect of various pay‐determining characteristics. Our self‐employed versus wage‐employed decomposition also controls for selection into self‐employment as well as those pay‐determining characteristics. We find that wage‐employed women would earn less than their current earnings if they shifted to self‐employment, while wage‐employed men would earn more than their current earnings if they became self‐employed. In essence, self‐employed women suffer from double jeopardy. They not only earn less than men in self‐employment due to lower returns for the same pay‐determining characteristics, but women in self‐employment also earn less than women in wage employment when they have the same pay‐determining characteristics.

Gain or loss? The well-being of women in self-employment

“…Second, this study expands the scope of the gender pay literature by considering well-being outcomes. Studies show that women in China receive less pay than men in different employment types and occupations across the pay distribution (e.g., Xiu and Gunderson, 2021). Our findings extend this literature by showing that women not only suffer worse economic outcomes than men but also fare poorly on well-being outcomes in employment.…”

“…This approach helps address the potential endogeneity problem that may exist when variables that affect employment type selection (self-employment vs. wage-employment) also affect employment outcomes (e.g., health or life satisfaction). Following previous literature on entrepreneurship (e.g., Xiu and Gunderson, 2021), we use two instruments to identify selection into types of employment: the father's self-employment in the past and the mother's selfemployment in the past. This endogenous switching approach allowed us to calculate a selection-corrected endowment effect and a return effect based on counterfactual measures.…”

“…Recent studies have examined gender differences in entrepreneurship, such as the income return to an entrepreneurial career (Xiu and Gunderson, 2021), financial challenges women encounter when pursuing entrepreneurship (Gupta and Mirchandani, 2018), and institutional and network barriers that women entrepreneurs might face (Zhao and Yang, 2021). However, despite recent research on the link between entrepreneurship and well-being (Wiklund et al, 2019), little is known about gender differences in entrepreneurs' well-being compared with those in wage employment.…”

Gendered motives towards hybrid entrepreneurial intentions: Empirical evidence from China

“…Besides, as Xiu and Gunderson (2021) revealed in their study that self‐employed women suffer from double jeopardy. They not only earn less than men in self‐employment due to lower returns for the same pay‐determining characteristics, but women in self‐employment also earn less than women in wage employment when they have the same pay‐determining characteristics.…”

“…Zhu and Chu (2010), Hernandez et al (2012), P. Liu et al (2013), and Zhu et al (2019) proved that women are more likely to engage in necessity‐based entrepreneurship because of their inability to meet basic economic needs. Moreover, in view of the findings of Xiu and Gunderson (2021), salaried women would earn less than their current earnings if they transitioned to self‐employment. As a result, this type of entrepreneurship penalty for women (vs. a premium for men) suggests that an entrepreneurial career does not pay for women in China.…”