Changes in the life-cycle earnings of Chinese workers: the role of education, gender, and economic reform

This paper examines the evolution of life-cycle earnings profiles of Chinese urban workers from 1989 to 2011, with a focus on education and gender heterogeneity and impact of the 1997 economic reforms. Using panel data from China Health and Nutrition Survey (CHNS), we find that the earnings profiles of Chinese workers became flatter after the 1997 economic reform except the high-educated female leading to a shrinking gender gap between high-educated workers. Furthermore, we decompose the earning growth into experience, cohort and time effects. We find that earnings growth is driven primarily by strong time effects, which are largely gender neutral but increasingly favour high-educated workers after 1997. Experience effects flatten markedly following the reform, especially for low-educated female workers, Cohort effects disproportionately benefits male and low-educated workers. We also identify a negative relationship between initial wages and subsequent wage growth, particularly for men, and show that workers exiting the labour force after the reform exhibit flatter earnings profiles, consistent with negative skill selection, particularly among low-educated women. Overall, the results highlight how large-scale institutional reforms reshape earnings dynamics and exacerbate inequality in rapidly transforming labour markets.