This paper focuses on the new form of economic segmentation that emerged in urban China
during the market transition, and its impact on gender segregation and earnings differentials. I argue
that the new logic of economic segmentation has altered the relative amount of economic returns to
jobs and changed the structural features of job queues. As a result, a new pattern of gender segregation
has emerged in the urban Chinese labor market. To test this hypothesis, I use data at three levels: a
1995 national sample of individual workers, industry-sector data for 1990 and 1995, and city-level
data for 1995. The findings indicate that gender segregation follows the new logic of economic
segmentation introduced by marketization. Male workers move into jobs that have gained in earnings,
squeezing out female workers from these high-paying jobs. Driven out of lucrative jobs, female
workers move into the state sector, now that this sector is becoming differentiated and its relative
economic advantage is waning. Further analysis based on a series of multilevel cross-classified models
suggests that in the most marketized cities, the earnings of workers of both sexes in jobs with high
rates of female entry are penalized, indicating that the negative effect of job feminization on earnings
exacerbates with marketization.