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Impact of the Global Financial Crisis in Rural China: Gender, Off-farm Employment, and Earnings

Impact of the Global Financial Crisis in Rural China: Gender, Off-farm Employment, and Earnings. Jikun Huang, Huayong Zhi, Zhurong Huang Center for Chinese Agricultural Policy, Chinese Academy of Sciences Scott Rozelle Stanford University Andrew D. Mason World Bank.

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Impact of the Global Financial Crisis in Rural China: Gender, Off-farm Employment, and Earnings

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  1. Impact of the Global Financial Crisis in Rural China: Gender, Off-farm Employment, and Earnings Jikun Huang, Huayong Zhi, Zhurong Huang Center for Chinese Agricultural Policy, Chinese Academy of Sciences Scott Rozelle Stanford University Andrew D. Mason World Bank

  2. Overall Increase in Off-farm Work by Rural Laborers (note 100% is the full rural labor force ≈ 500 million people) In 1981: only 16% worked off the farm In 2008: 62% of rural labor force had jobs off the farm  about 80% of households had at least 1 person working off the farm

  3. There were even more dramatic increases in off-farm participation when looking at cohorts of workers – especially the younger ones

  4. Wages in recent years also have risen fast (not surprising—given there are few people who do not have a job in most prime-aged cohorts) • During the 1980s and 1990s  the hourly wage of an unskilled worker was almost flat .. • But, between 2000 and 2008, rose by almost 60% (or 6.5% annually) Yuan / hour (real 2008 yuan)

  5. In sum: There is a remarkable transformation of China’s rural labor force going on since the 1990s • Indeed: if one goes into any given rural village in China today, it is very difficult to find any young people in the village • One study by Chinese Academy of Social Science found that in 2007 almost any one who wanted a job in rural China could find one … • Therefore, it is almost safe to say that in 2008, the rural labor transition was complete for young people …

  6. But, these aggregate labor trends through 2008 may be disguising differences among sub-sectors in the labor sector • Have both men and women benefited equally from the rural labor boom? • What has happened since the global financial crisis? (reports of layoffs of between 20 and 40 million workers surfaced in the media inside and outside of China) • Internationally, it is often assumed that women bore the brunt of the downturn in labor opportunities … is this true in China?

  7. Goals and objectives • Overall goal: answer these questions • Specifically try to achieve 3 objectives: • We want to document how women have fared in China’s rural labor markets between 2000-08 • We want to track the impact of the global financial crisis on China’s rural labor force (in general) • We seek to understand if the impact of the crisis has had a relatively heavy effect on women

  8. Plan for the rest of the paper Since this is mostly a descriptive, empirical paper: FIRST: describe data SECOND: use data to achieve our objectives: a.) disaggregate trends in rural labor by gender b.) look at trends since Sept. 2008 c.) examine gender impacts of crisis

  9. Data Collected data from a nationally representative sample of households in 2000 and in 2008 • 6 provinces - 1 in each of China’s “major zones” • Hebei, Shaanxi, Liaoning, Zhejiang, Sichuan, Hubei • 5 counties per province-- 1 randomly selected from each income quintile • 2 villages randomly selected in each county • 20 households randomly selected in each village

  10. 2000 China National Land and Labor Survey (First Wave) -- 6 Provinces -- 5 Counties / Province -- 2 Villages / County -- 20 Households / Village  1200 hh’s Liaoning Hebei Shaanxi Zhejiang Sichuan Hubei

  11. 2008 China National Land and Labor Survey (Second Wave) -- 6 Provinces -- 5 Counties / Province -- 2 Villages / County -- 20 Households / Village  1160 hh’s Liaoning Hebei Shaanxi Zhejiang Sichuan Two villages in one county were almost completely destroyed by the earthquake in Sichuan Hubei Surveyed: May 2009

  12. Contents of Survey • Housing • Farmland • Agriculture • Self-run enterprise • Consumer durables • Other income • Household basic information • Employment (by individual … i.e., for men/women; by age) • off-farm employment from 2000 to 2008 (annual data) • off-farm employment from May 2007 to Apr 2009 (month by month for 24 months) [this is from a time before the financial crisis and extending to a time after the financial crisis]

  13. Rural Labor Trends—a gender perspective [before the financial crisis]

  14. Overall Increase in Off-farm Work Remember: by 2008, overall 62% of the rural labor force had a job off the farm In 2008: 75% of rural men have jobs off the farm Share rural labor force with off farm jobs 75% Male 62% Total

  15. Overall Increase in Off-farm Work Here is the case for women: in 2008 46% of rural women have jobs off the farm Share rural labor force with off farm jobs 75% Male 62% Total 46% Female

  16. So we can see that although the growth of off-farm employment has been fast for both men and women; since the starting point was lower for women, their employment rates are considerably below those for men … Women vs. Men in rural off-farm labor market Share rural labor force with off farm jobs Male Female

  17. Participation by rural off farm labor force by gender in 2008 Note: the labor participation rates for men and women are both really high in the younger cohorts … only 5 percentage points different … but, most of the discrepancy between men and women appear for the older cohorts [why? Because after marriage and at the time women have a baby, they often go back to the village … and stop working off farm]

  18. Changes in wages over time for men and women Yuan / hour (real 2008 yuan) • Wages for both men and women have risen sharply between 2000 and 2008 • But, two differences by gender • Women’s wages are lower than men’s in 2000 • Women’s wage grow slower (43%) than men’s (63%) 2008 2008 2000 2000

  19. In sum, between 2000 and 2008 … • Women have benefited a lot during the reforms (after 1980s) and especially between 2000 and 2008 • Employment rates are very high for young women … wages have grown rapidly … • But, there are obvious discrepancies when considering gender differences • Men … especially older men … work more off the farm (relative to women) … • Men’s wages are higher

  20. So there has been progress … What happened after September 2008?

  21. Annual growth rates of GDP (%), 2001-2008 China India World EU Japan US Source: IMF

  22. Annual growth rates of GDP (%), 2001-2008 China India World EU Japan US Source: IMF Here is the world’s slow down in 2008 … although China (and India) are still growing, slow down is equally sharp …

  23. Quarterly GDP growth rates (%), 2008.1 – 2009.6 China India US EU Japan Also see it in the quarterly data … although here we can see the robustness of the economies of China and India … they are already reaccelerating by Q2 2009 Source: NSBC

  24. So how did the global crises affect China? Mostly through trade linkages (China’s banks are fully solvent)Monthly imports and exports, China (billion US$) Exports Imports Sept. 2008 Using monthly data … trade can be seen to be the link that ties China to the ROW … Source: NSBC, 2009

  25. What happened to rural labor during the crisis? Did all of the “progress” that we discussed above disappear?[as was the fear of many inside China …] • look at overall impacts • then: impacts on women—in particular

  26. Annual share (%) of rural labors with off-farm jobs in China, 2000-2009 Business As Usual (BAU) -7.33% Estimated from actual impact through April 2009

  27. Share (%) of off-farm rural labor force (of the total rural labor force) in China, monthly in May 2007 – April 2009 Business As Usual Actual -5.19% China -- all

  28. Impact on Rural Off-farm Labor Force by April 2009 in China 5.19% of rural labor force (≈ 27 million) Note that even though employment fell from Sept. 2008 (actual) to April 2009 (actual), the labor market was still quite dynamic … a lot of workers laid off (we will discuss these below), but there were a lot of “newcomers,” too

  29. Overall Impacts • Large layoffs … • Even larger employment impacts when compare “Business as Usual” to Actual  ≈ 27 million off-farm employment for rural laborers in April 2009 Next question: has there any impacts of those who have not been laid-off? • To do this, we look at off-farm income and wage rate.

  30. Off-farm wage (wage earning members of the rural off-farm labor force) Yuan / month So what is the impact? Remember between 2000 and 2008 wages were growing by about 6.5% per year … But, between 2008 and 2009, wages stopped growing … and actually fell …

  31. Next step of analysis: look at three question: How many actually laid off after Sept. 2008? How many of those that were laid off were able to find a new job by April 2009? What happened to those that lost their jobs and had not found a new one by April 2009 (long term laid-offs?)

  32. For those in rural off farm labor force in Sept. 2008:What was their off-farm employment status between Oct 2008 and April 2009? There are two points to take away from this graph. First: in total, about 49 million people were laid off (about equal to the entire labor force of Germany) But, second: about half of the people that were actually laid off, have now found a job again … as you can see, the recovery is well underway … How many? 9.0% * 274 million ≈ 25 million

  33. What happened to those that lost their jobs and had not found a new one by April 2009 (long term laid-offs?) [Of our sample: 124 persons were long term laid-offs: 4.8% of the rural labor force 9.1% of rural labor w/ off-farm employment]

  34. Transition to other activities of those that lost jobs between Oct 2008 and April 2009 Of those that are laid off … and could not find a job, nearly 2/3 have returned to farming … or kept themselves busy doing housework … only 1/3 are searching for job …, which is about only 1.5% of the rural workforce. Percentage of laid off workers that still had not found job by April 2009 Searching for off farm job Working at home, not searching for off farm work Working on farm, not searching for off farm work Working off farm This means that 8 million truly “unemployed”

  35. What happened after April 2009?To study this, we conducted a third wave of the panelWe did a September 2009 phone follow up surveyRecovery after in May-August 2009 • 30% of them found new off-farm jobs in May-August • Interestingly, of those that found a job between May 2009 and August 2009, they came from all three categories: those that were farming; those that were doing housework; and those that were actively searching a job • Puts financial crisis-created unemployment at < 1%

  36. Were women hurt more than men? Final and Crucial Question of our Study:

  37. Interestingly: if we just put a gender dummy in this regression … there is no impact on women (in general) … though those that are younger … and less education were hurt more …

  38. However, a more subtle picture emerges when we interact the gender variable with age and education … the coefficient on the gender dummy is positive and significant … and the interaction terms also are significant … how to interpret?

  39. Wage effects by gender Yuan / month

  40. Employment status between Oct 2008 and April 2009by gender Women Men

  41. There also are differences in what men and women were doing after they lost their jobs between October 2008 and April 2009 Women Men Searching for off farm work Working on farm, not searching for off farm work Working at home, not searching for off farm work Working off farm

  42. Concluding Remarks • Although China’s growth rates remain high … the fall in growth rates are equally serious (just started from a higher rate) • As might be expected: There have been substantial impacts • Lay-offswere high: 17.9% of those with off-farm jobs were laid off after Sept. 2008 (48.9 million) • But, the net lost was only about 27 million off-farm employment (5.19% of rural labor forces) by April 2009 • Note: Wages fell for all! • But china’s economy is truly flexible and robust • About half of the people that were actually laid off, had found an off farm job again before April 2009… • Of those that were laid off and did not find an off farm job by April 2009, only 1/3 were still looking … most (2/3) have returned to farming. • By August 2009, for those who had not found new off-farm job by April 2009, 30% of them got off-farm jobs in May-August

  43. Last and most important for today’s presentation: • Although women have made progress in China’s rural labor markets, in general … they have lagged behind men … • Interestingly, there is some evidence that younger and less educated women were more likely to be laid off due to the financial crisis … but, in fact, the most accurate way of saying it is that BOTH men and women were hurt … and BOTH men and women have recovered fast … • China still needs to address gender imbalances in the rural labor market … but, this is not really a financial crisis effect … it is a longer term structural effect …

  44. Thank you!

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