Digital finance, Bargaining Power and Gender Wage Gap

TL;DR

This study investigates how digital finance in China reduces the gender wage gap by enabling female entrepreneurship and increasing bargaining power, especially benefiting women from disadvantaged backgrounds.

Contribution

It provides empirical evidence that digital finance decreases gender wage disparity by promoting women's employment, entrepreneurship, and bargaining power, with robust analysis addressing endogeneity.

Findings

Digital finance reduces the gender wage gap in China.

It promotes female entrepreneurship and employment.

Women from lower socio-economic backgrounds benefit more.

Abstract

The proliferation of internet technology has catalyzed the rapid development of digital finance, significantly impacting the optimization of resource allocation in China and exerting a substantial and enduring influence on the structure of employment and income distribution. This research utilizes data sourced from the Chinese General Social Survey and the Digital Financial Inclusion Index to scrutinize the influence of digital finance on the gender wage disparity in China. The findings reveal that digital finance reduces the gender wage gap, and this conclusion remains robust after addressing endogeneity problem using instrumental variable methods. Further analysis of the underlying mechanisms indicates that digital finance facilitates female entrepreneurship by lowering financing barriers, thereby promoting employment opportunities for women and also empowering them to negotiate higher wages. Specially, digital finance enhances women's bargaining power within domestic settings, therefore exerts a positive influence on the wages of women. Sub-sample regressions demonstrate that women from economically disadvantaged backgrounds, with lower human capital, benefit more from digital finance, underscoring its inclusive nature. This study provides policy evidence for empowering vulnerable groups to increase their wages and addressing the persistent issue of gender income disparity in the labor market.