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Selection bias, comparative advantage and heterogeneous returns to education: evidence from China in 2000

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James J. Heckman
Xuesong Li

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Abstract

This paper uses Chinese micro data and new semi-parametric methods to estimate the current return to college education allowing for heterogeneous returns and for self-selection into schooling based on them. OLS and IV methods do not properly account for this sorting. Our estimates suggest that, for a randomly selected young person from an urban area, college attendance leads to a 43% increase in lifetime earnings (nearly 11% annually) in 2000, compared with just 36% (nearly 9% annually) for those who do not attend. Our evidence suggests that the return to education has increased substantially in China since the early 1990s. Copyright 2004 Blackwell Publishing Ltd

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Article provided by Blackwell Publishing in its journal Pacific Economic Review.

Volume (Year): 9 (2004)
Issue (Month): 3 (October)
Pages: 155-171
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Handle: RePEc:bla:pacecr:v:9:y:2004:i:3:p:155-171

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Pedro Carneiro & James J. Heckman, 2002. "The Evidence on Credit Constraints in Post--secondary Schooling," Economic Journal, Royal Economic Society, vol. 112(482), pages 705-734, October. [Downloadable!] (restricted)
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  2. James J. Heckman & Edward J. Vytlacil, 2000. "Local Instrumental Variables," NBER Technical Working Papers 0252, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Heckman, James J. & Lochner, Lance J. & Todd, Petra E., 2003. "Fifty Years of Mincer Earnings Regressions," IZA Discussion Papers 775, Institute for the Study of Labor (IZA). [Downloadable!]
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  4. Bjorklund, Anders & Moffitt, Robert, 1987. "The Estimation of Wage Gains and Welfare Gains in Self-selection," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 42-49, February. [Downloadable!] (restricted)
  5. Heckman, James & Navarro-Lozano, Salvador, 2003. "Using matching, instrumental variables and control functions to estimate economic choice models," Working Paper Series 2003:4, IFAU - Institute for Labour Market Policy Evaluation. [Downloadable!]
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  6. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Luo, Xubei & Zhu, Nong, 2008. "Rising income inequality in China : a race to the top," Policy Research Working Paper Series 4700, The World Bank. [Downloadable!]
  2. Tavneet Suri, 2006. "Selection and Comparative Advantage in Technology Adoption," Working Papers 944, Economic Growth Center, Yale University. [Downloadable!]
  3. Hongbin Li & Pak Wai Liu & Ning Ma & Junsen Zhang, 2005. "Does Education Pay in Urban China? Estimating Returns to Education Using Twins," Discussion Papers 00013, Chinese University of Hong Kong, Department of Economics. [Downloadable!]
  4. Shuang LI & Ming LU & Hiroshi Sato, 2008. "The Value of Power in China: How Do Party Membership and Social Networks Affect Pay in Different Ownership Sectors?," Global COE Hi-Stat Discussion Paper Series gd08-011, Institute of Economic Research, Hitotsubashi University. [Downloadable!]
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