Does an Entrepreneurial Career Pay for Women in China?

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.