Does Fintech Narrow the Gender Wage Gap? Evidence from China

• Published date: 01 July 2021
• Author: Qing Guo,Siyu Chen,Xiangquan Zeng
• Date: 01 July 2021
• DOI: http://doi.org/10.1111/cwe.12382

©2021 Institute of World Economics and Politics, Chinese Academy of Social Sciences

China & World Economy / 142–166, Vol. 29, No. 4, 2021

142

*Qing Guo, PhD Candidate, School of Labor and Human Resources, Renmin University of China, China.

Email: qingguo@ruc.edu.cn; Siyu Chen, PhD Candidate, School of Labor and Human Resources, Renmin

University of China, China. Email: csy2018@ruc.edu.cn; Xiangquan Zeng (corresponding author),

Professor, School of Labor and Human Resources, Renmin University of China, China. Email: zengxq@

ruc.edu.cn. This work is supported by the Fundamental Research Funds for the Central Universities, and

the Research Funds of Renmin University of China (No. 21XNH075). The authors would like to thank

Jin Feng, Xiaoning Long, Hong Liu, Fei Wang, Xiangbo Liu, and the anonymous reviewers for helpful

advice and comments. The authors are grateful for the advice from the 17th China Women Economists

International Workshop of 2020.

Does Fintech Narrow the Gender Wage Gap?

Evidence from China

Qing Guo, Siyu Chen, Xiangquan Zeng*

Abstract

Information and communication technology promotes the rapid development of fi ntech,

which has a far-reaching impact on wage distribution in China. Using data from the

Chinese General Social Survey and the Index of Digital Financial Inclusion, this study

examines the impact of fi ntech on the gender wage gap. We fi nd that fi ntech (i) narrows

the gender wage gap; (ii) reduces capital constraints and operating costs, thereby

promoting female entrepreneurship, driving more women into employment, and enabling

women to increase their wages and bargaining power within the household; and (iii)

positively impacts the wages of women (and men) who have lower family economic

status, and helps women (but not men) counter the risk of decline in wages caused by

childbearing and caring under the two-child policy. These fi ndings have important policy

implications and provide evidence of women’s improving economic conditions leading to

a reduced gender wage gap.

Key words: entrepreneurship, fi ntech, gender wage gap, two-child policy

JEL codes: D14, D31, J16

I. Introduction

Fair wage distribution is important in building an effective and inclusive labor market,

and it is a key factor for sustainable economic growth and social stability. As a critical

wage distribution issue, the study of the gender wage gap has attracted significant

©2021 Institute of World Economics and Politics, Chinese Academy of Social Sciences

Fintech and Gender Wage Gap 143

scholarly attention. Golley et al. (2019) revealed an alarmingly high relative share of

inequality of opportunity in nationwide individual labor earnings of 25 percent, and

the inequality of opportunity is higher among Chinese women than among Chinese

men. Deeply influenced by history and culture, Asian countries such as China face

particularly conspicuous gender inequalities (Chen et al., 2020), leading to prejudice

and ineffi ciencies in the labor market. In recent years, the two-child policy has further

exacerbated the gender wage gap in China (Yang and Zhou, 2019). China has attached

great importance to the issues of gender equality and women’s development. A series

of policies and measures has been implemented to improve gender equality, promote

social justice, and improve the labor market. The global gross domestic product (GDP)

growth was projected to reach US$12 trillion by 2025 if equal gender opportunities

were achieved (McKinsey Global Institute, 2015). Thus, women’s development, and

narrowing the gender gap in China – the country with one-fi fth of the world’s female

population − could further promote domestic and global economic development (State

Council Information Offi ce of China, 2015).

The world benefits from rapidly advancing information and communication

technology, big data, the Internet of Things, and cloud computing. With these

technological tools, the innovation of conventional finance and the development of

fi ntech – such as Alipay and WeChat Pay in China – have reached a new peak. With the

aid of fi ntech, major e-commerce platforms reached their sales peak at the 2019 Double

Eleven Event, during which (based on Alipay data) over 8 million products were ordered

interest-free in platform on Ant Credit Pay. From August to November in 2019, 3 million

businesses received a total of RMB300 billion in financial support through fintech

channels, indicating that fi ntech results in signifi cant convenience both for consumers

and businesses (Xinhua News Agency, 2019). Its development and popularization

promote the use of financial services and reduce financial constraints, which

encourages entrepreneurship among disadvantaged groups with fi nancing diffi culties −

small and micro businesses, and rural residents (Xie et al., 2018; Zhang et al.,

2019). According to a report, female entrepreneurs in China account for a quarter of

all entrepreneurs worldwide and are steadily increasing (State Council Information

Office of China, 2015). About 41 percent of Chinese technological businesses have

female founders, which is 14 percent higher than that in the US (SPD Silicon Valley

Bank, 2020). However, only one-sixth of women − one of the groups with financial

diffi culties − can access fi nancial accounts, lower than men by 4–19 percent because of

the lack of credit record, capital threshold, culture, and others (Halim, 2020). Clearly,

women are highly entrepreneurial, but they remain at a disadvantage with regard to

fi nancing and establishing a business. Can examining whether fi ntech encourages female