Abstract: From 1989 to 2009, female labor force participation (FLFP) in urban China decreased by nearly 10 percentage points when China was growing fast. This decline is driven by significant falls in the participation of young and married women across cohorts even though their earnings were increasing. This paper investigates the quantitative importance of multiple channels to explain the fall in FLFP across cohorts with a household life-cycle model in which married women endogenously decide whether to work. The counterfactual experiments show that a widening gender pay gap can explain 50-80% of the decline in the participation of women without college education between the 1950 and 1970 cohorts. Increased childcare cost accounts for most of the remaining decline. Increased assortative mating has heterogeneous effects across education levels and decreased fertility only increases participation marginally. The difference in FLFP between the 1950 and 1970 cohorts could explain around 40% of the declined FLFP over the years. (link)

Abstract: Until the early 1990s, jobs were assigned by the government in urban China, and education opportunities were limited. Under these constraints, talented people, especially women, may not have been educated or assigned to occupations that suited their abilities best, resulting in a misallocation of human capital. Over the years, market-oriented reforms abolished the job assignment system and expanded college education significantly. This paper investigates the consequences of these reforms. I build a quantitative model of occupational and educational choice with wedges to measure the degrees of misallocation. I find that these reforms have significantly reduced misallocations. Without these reforms, 19% of young people in 2010 would have chosen different occupations. Consequently, the human capital of the young cohort would have been 1.6% lower, and economic output would have been 0.8% lower. (link)