IDEAS home Printed from https://ideas.repec.org/a/ags/aareaj/333891.html
   My bibliography  Save this article

The returns to education in rural China: Some new estimates

Author

Listed:
  • Liu, Chengfang
  • Li, Ye
  • Li, Shaoping
  • Luo, Renfu
  • Zhang, Linxiu
  • Rozelle, Scott
  • Hagist, Spencer
  • Hou, Jack

Abstract

We estimate the rates of return to education in rural China using primary survey data collected in 2016. Estimated average returns to education are 3.1 per cent. However, careful statistical analysis is required when estimating the returns to education. The paper demonstrates that when employment interruptions are accounted for, the measured returns to education rise. Our results also confirm that mismeasurement of the wage rate by using an hourly wage rate (versus daily or monthly earnings) raises the estimation of rates of return to education. Finally, our results suggest that the return to education is nonlinear in education levels but only when it reaches the tertiary level.

Suggested Citation

  • Liu, Chengfang & Li, Ye & Li, Shaoping & Luo, Renfu & Zhang, Linxiu & Rozelle, Scott & Hagist, Spencer & Hou, Jack, 2020. "The returns to education in rural China: Some new estimates," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(1), January.
    • Handle: RePEc:ags:aareaj:333891
    DOI: 10.22004/ag.econ.333891
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/333891/files/ajar12350.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.333891?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Margaret Maurer-Fazio & Ngan Dinh, 2004. "Differential rewards to, and contributions of, education in urban China's segmented labor markets," Pacific Economic Review, Wiley Blackwell, vol. 9(3), pages 173-189, October.
    2. Jérôme Adda & Christian Dustmann & Katrien Stevens, 2017. "The Career Costs of Children," Journal of Political Economy, University of Chicago Press, vol. 125(2), pages 293-337.
    3. Di Mo & Linxiu Zhang & Hongmei Yi & Renfu Luo & Scott Rozelle & Carl Brinton, 2013. "School Dropouts and Conditional Cash Transfers: Evidence from a Randomised Controlled Trial in Rural China's Junior High Schools," Journal of Development Studies, Taylor & Francis Journals, vol. 49(2), pages 190-207, February.
    4. Byron, Rayond P & Manaloto, Evelyn Q, 1990. "Returns to Education in China," Economic Development and Cultural Change, University of Chicago Press, vol. 38(4), pages 783-796, July.
    5. Heckman, James & Li, Xuesong, 2003. "Selection bias, comparative advantage and heterogeneous returns to education: Evidence from China in 2000," Working Paper Series 2003:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    6. Yi, Hongmei & Song, Yingquan & Liu, Chengfang & Huang, Xiaoting & Zhang, Linxiu & Bai, Yunli & Ren, Baoping & Shi, Yaojiang & Loyalka, Prashant & Chu, James & Rozelle, Scott, 2015. "Giving kids a head start: The impact and mechanisms of early commitment of financial aid on poor students in rural China," Journal of Development Economics, Elsevier, vol. 113(C), pages 1-15.
    7. Prashant Loyalka & Sean Sylvia & Chengfang Liu & James Chu & Yaojiang Shi, 2019. "Pay by Design: Teacher Performance Pay Design and the Distribution of Student Achievement," Journal of Labor Economics, University of Chicago Press, vol. 37(3), pages 621-662.
    8. Orley Ashenfelter & David J. Zimmerman, 1997. "Estimates Of The Returns To Schooling From Sibling Data: Fathers, Sons, And Brothers," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 1-9, February.
    9. William L. Parish & Xiaoye Zhe & Fang Li, "undated". "Nonfarm Work and Marketization of the Chinese Countryside," University of Chicago - Population Research Center 95-6, Chicago - Population Research Center.
    10. Qihui Chen & Jingqin Xu & Jiaqi Zhao & Bo Zhang, 2017. "Endogenous schooling, school proximity and returns to rural schooling in Northwestern China," China Agricultural Economic Review, Emerald Group Publishing Limited, vol. 9(2), pages 270-286, May.
    11. Prashant Loyalka & Anna Popova & Guirong Li & Zhaolei Shi, 2019. "Does Teacher Training Actually Work? Evidence from a Large-Scale Randomized Evaluation of a National Teacher Training Program," American Economic Journal: Applied Economics, American Economic Association, vol. 11(3), pages 128-154, July.
    12. Li, Hongbin & Liu, Pak Wai & Zhang, Junsen, 2012. "Estimating returns to education using twins in urban China," Journal of Development Economics, Elsevier, vol. 97(2), pages 494-504.
    13. Samuel P.S. Ho & Xiao-Yuan Dong & Paul Bowles & Fiona MacPhail, 2002. "Privatization and enterprise wage structures during transition: Evidence from rural industry in china," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(3), pages 659-688, November.
    14. Gregory, R. G. & Meng, Xin, 1995. "Wage Determination and Occupational Attainment in the Rural Industrial Sector of China," Journal of Comparative Economics, Elsevier, vol. 21(3), pages 353-374, December.
    15. Yang, Dennis Tao, 2005. "Determinants of schooling returns during transition: Evidence from Chinese cities," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 244-264, June.
    16. Card, David, 2001. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," Econometrica, Econometric Society, vol. 69(5), pages 1127-1160, September.
    17. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, March.
    18. Knight, John B & Song, Lina, 1991. "The Determinants of Urban Income Inequality in China," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(2), pages 123-154, May.
    19. Goldin, Claudia, 2006. "The Quiet Revolution That Transformed Women’s Employment, Education, and Family," Scholarly Articles 2943933, Harvard University Department of Economics.
    20. Claudia Goldin, 2006. "The Quiet Revolution That Transformed Women's Employment, Education, and Family," American Economic Review, American Economic Association, vol. 96(2), pages 1-21, May.
    21. Liu, Zhiqiang, 1998. "Earnings, Education, and Economic Reforms in Urban China," Economic Development and Cultural Change, University of Chicago Press, vol. 46(4), pages 697-725, July.
    22. Xin Meng & Robert G. Gregory, 2005. "Intermarriage and the Economic Assimilation of Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 23(1), pages 135-176, January.
    23. Prashant Loyalka & Xiaoting Huang & Linxiu Zhang & Jianguo Wei & Hongmei Yi & Yingquan Song & Yaojiang Shi & James Chu, 2016. "The Impact of Vocational Schooling on Human Capital Development in Developing Countries: Evidence from China," The World Bank Economic Review, World Bank, vol. 30(1), pages 143-170.
    24. George Psacharopoulos & Harry Anthony Patrinos, 2004. "Returns to investment in education: a further update," Education Economics, Taylor & Francis Journals, vol. 12(2), pages 111-134.
    25. Alan De Brauw & Scott Rozelle, 2008. "Reconciling the Returns to Education in Off‐Farm Wage Employment in Rural China," Review of Development Economics, Wiley Blackwell, vol. 12(1), pages 57-71, February.
    26. James W. Albrecht & Per-Anders Edin & Marianne Sundström & Susan B. Vroman, 1999. "Career Interruptions and Subsequent Earnings: A Reexamination Using Swedish Data," Journal of Human Resources, University of Wisconsin Press, vol. 34(2), pages 294-311.
    27. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4, National Bureau of Economic Research, Inc.
    28. Li, Haizheng, 2003. "Economic transition and returns to education in China," Economics of Education Review, Elsevier, vol. 22(3), pages 317-328, June.
    29. Samuel P.S. Ho & Xiao–Yuan Dong & Paul Bowles & Fiona MacPhail, 2002. "Privatization and enterprise wage structures during transition: Evidence from rural industry in china," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 10(3), pages 659-688, November.
    30. Peet, Evan D. & Fink, Günther & Fawzi, Wafaie, 2015. "Returns to education in developing countries: Evidence from the living standards and measurement study surveys," Economics of Education Review, Elsevier, vol. 49(C), pages 69-90.
    31. Hongbin Li & PakWai Liu & Junsen Zhang & Ning Ma, 2007. "Economic Returns to Communist Party Membership: Evidence From Urban Chinese Twins," Economic Journal, Royal Economic Society, vol. 117(523), pages 1504-1520, October.
    32. Jamison, Dean T. & Van der Gaag, Jacques, 1987. "Education and earnings in the People's Republic of China," Economics of Education Review, Elsevier, vol. 6(2), pages 161-166, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Fanlue Li & Ke He & Run Zhu & Junbiao Zhang & Ming Gao, 2023. "Rural low‐carbon energy development in the information age: Can internet access drive the farmer to participate in personal carbon trading schemes related to bioenergy?," Sustainable Development, John Wiley & Sons, Ltd., vol. 31(3), pages 1417-1432, June.
    2. Li, Fanlue & He, Ke & Wang, Yuejie & Zhang, Junbiao, 2021. "Does Indoor Air Pollution from Solid Fuels Influence the Mental Health of Rural Residents? Evidence from China," 2021 Conference, August 17-31, 2021, Virtual 315024, International Association of Agricultural Economists.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Liu, C., 2018. "Reconciling Returns to Education in Off-Farm Wage Employment among Women in Rural China," 2018 Conference, July 28-August 2, 2018, Vancouver, British Columbia 276941, International Association of Agricultural Economists.
    2. M Niaz Asadullah & Saizi Xiao, 2019. "Labor Market Returns to Education and English Language Skills in the People's Republic of China: An Update," Asian Development Review, MIT Press, vol. 36(1), pages 80-111, March.
    3. Sefa Awaworyi Churchill & Vinod Mishra, 2018. "Returns to education in China: a meta-analysis," Applied Economics, Taylor & Francis Journals, vol. 50(54), pages 5903-5919, November.
    4. CHEN, Guifu & HAMORI, Shigeyuki, 2009. "Economic returns to schooling in urban China: OLS and the instrumental variables approach," China Economic Review, Elsevier, vol. 20(2), pages 143-152, June.
    5. Fleisher, Belton M. & Sabirianova, Klara & Wang, Xiaojun, 2005. "Returns to skills and the speed of reforms: Evidence from Central and Eastern Europe, China, and Russia," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 351-370, June.
    6. 岩﨑, 一郎 & Iwasaki, Ichiro & 馬, 欣欣 & Ma, Xin Xin, 2019. "現代中国における男女賃金格差: メタ分析による接近," Discussion Paper Series 689, Institute of Economic Research, Hitotsubashi University.
    7. Lin Xiu & Morley Gunderson, 2013. "Credential Effects and the Returns to Education in China," LABOUR, CEIS, vol. 27(2), pages 225-248, June.
    8. Hai Fang & Karen N. Eggleston & John A. Rizzo & Scott Rozelle & Richard J. Zeckhauser, 2012. "The Returns to Education in China: Evidence from the 1986 Compulsory Education Law," NBER Working Papers 18189, National Bureau of Economic Research, Inc.
    9. Iwasaki, Ichiro & Ma, Xinxin, 2020. "Gender Wage Gap in China: A Large Meta-Analysis," CEI Research Paper Series 2020-5, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    10. Iwasaki, Ichiro & Ma, Xinxin, 2020. "Gender wage gap in China: a large meta-analysis," Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 54, pages 1-17.
    11. Lee, Soohyung & Malin, Benjamin A., 2013. "Education's role in China's structural transformation," Journal of Development Economics, Elsevier, vol. 101(C), pages 148-166.
    12. Moock, Peter R. & Patrinos, Harry Anthony & Venkataraman, Meera, 2003. "Education and earnings in a transition economy: the case of Vietnam," Economics of Education Review, Elsevier, vol. 22(5), pages 503-510, October.
    13. Lili Kang & Fei Peng, 2012. "A selection analysis of returns to education in China," Post-Communist Economies, Taylor & Francis Journals, vol. 24(4), pages 535-554, March.
    14. Castro Campos, Bente & Ren, Yanjun & Petrick, Martin, 2016. "The impact of education on income inequality between ethnic minorities and Han in China," China Economic Review, Elsevier, vol. 41(C), pages 253-267.
    15. Zhong, Hai, 2011. "Returns to higher education in China: What is the role of college quality?," China Economic Review, Elsevier, vol. 22(2), pages 260-275, June.
    16. Emanuela di Gropello, 2006. "Meeting the Challenges of Secondary Education in Latin America and East Asia : Improving Efficiency and Resource Mobilization," World Bank Publications - Books, The World Bank Group, number 7173, December.
    17. Yi CHEN & Sylvie DEMURGER & Martin FOURNIER, 2004. "Différentiels salariaux, segmentation et discrimination à l’égard des femmes sur le marché du travail chinois," Working Papers 200426, CERDI.
    18. Zhang, Junsen & Zhao, Yaohui & Park, Albert & Song, Xiaoqing, 2005. "Economic returns to schooling in urban China, 1988 to 2001," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 730-752, December.
    19. Serneels, Pieter & Beegle, Kathleen & Dillon, Andrew, 2017. "Do returns to education depend on how and whom you ask?," Economics of Education Review, Elsevier, vol. 60(C), pages 5-19.
    20. Alan De Brauw & Scott Rozelle, 2008. "Reconciling the Returns to Education in Off‐Farm Wage Employment in Rural China," Review of Development Economics, Wiley Blackwell, vol. 12(1), pages 57-71, February.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:aareaj:333891. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.