The effect of the universal two-child policy on the gender wage gap in urban China

On 1 January 2016, China further relaxed its family planning policy and adopted the universal two-child policy, which allows any Chinese couple to have two children to address the country’s increasingly severe ageing problems and low fertility. With this shift comes a direct and profound impact on society, especially women; this paper evaluates the effect of the universal two-child policy on the gender wage gap and its mechanism. Several major conclusions emerge from this analysis. The policy significantly expands the urban gender wage gap by 12.86% in the low-policy-fertility-rate (PFR) provinces versus high-PFR provinces. Evidently, it increases the gap among younger or lower-educated people. Moreover, the severity of gender discrimination in the labour market after the implementation of the universal two-child policy is rising, and deserves further attention.