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.