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Economic returns to schooling in urban China: OLS and the instrumental variables approach

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  • CHEN, Guifu
  • HAMORI, Shigeyuki

Abstract

This paper examines economic returns to schooling in urban China using ordinary least square (OLS) and instrumental variable (IV) methodologies. First, we find that OLS estimates of the returns to education are lower in China than in other transition economies, whereas IV estimates are higher in China. Second, we find that OLS, a method for estimating the returns to education without control for endogeneity bias, may underestimate the true rates of return for men. In addition, if we do not control for endogeneity bias and the sample selection bias, we may further underestimate the true rates of return for women. Finally, we find that OLS estimates of the returns to education for men are slightly higher than for women. The IV estimates for women are higher than those for men, and this difference increases after correcting for selectivity biases.

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Bibliographic Info

Article provided by Elsevier in its journal China Economic Review.

Volume (Year): 20 (2009)
Issue (Month): 2 (June)
Pages: 143-152

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Handle: RePEc:eee:chieco:v:20:y:2009:i:2:p:143-152

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Web page: http://www.elsevier.com/locate/chieco

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Keywords: Returns to schooling Instrumental variables China Health and Nutrition Survey;

References

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Citations

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Cited by:
  1. Wenshu Gao & Russell Smyth, 2012. "Returns to Schooling in Urban China, 2001-2010: Evidence from Three Waves of the China Urban Labor Survey," Development Research Unit Working Paper Series 50-12, Monash University, Department of Economics.
  2. 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.
  3. Vinod Mishra & Russell Smyth, 2012. "Returns to Schooling in Urban China: New Evidence Using Heteroskedasticity Restrictions to Obtain Identification Without Exclusion Restrictions," Development Research Unit Working Paper Series 33-12, Monash University, Department of Economics.
  4. Chen, Guifu & Hamori, Shigeyuki, 2010. "Bivariate probit analysis of differences between male and female formal employment in urban China," Journal of Asian Economics, Elsevier, vol. 21(5), pages 494-501, October.
  5. Wang, Le, 2013. "Estimating returns to education when the IV sample is selective," Labour Economics, Elsevier, vol. 21(C), pages 74-85.
  6. Tom Coupe & Hanna Vakhitova, 2011. "Recent Dynamics of Returns to Education in Transition Countries," Discussion Papers 39, Kyiv School of Economics.
  7. Martin Carnoy & Prashant Loyalka & Gregory Androushchak & Anna Proudnikova, 2012. "The Economic Returns to Higher Education in the BRIC Countries and their Implications for Higher Education Expansion," HSE Working papers WP BRP 02/EDU/2012, National Research University Higher School of Economics.
  8. Juliet Elu & Gregory Price, 2013. "Does Ethnicity Matter for Access to Childhoodand Adolescent Health Capital in China? Evidence from the Wage-Height Relationship in the 2006 China Health and Nutrition Survey," The Review of Black Political Economy, Springer, vol. 40(3), pages 315-339, September.
  9. Faqin Lin & Can Huang & Xiaobo He & Chao Zhang, 2013. "Do more highly educated entrepreneurs matter?," Asian-Pacific Economic Literature, Asia Pacific School of Economics and Government, The Australian National University, vol. 27(2), pages 104-116, November.
  10. Liu, Shenglong & Hu, Angang, 2013. "Demographic change and economic growth: Theory and evidence from China," Economic Modelling, Elsevier, vol. 35(C), pages 71-77.
  11. Kang, Lili & Peng, Fei, 2012. "Siblings, public facilities and education returns in China," MPRA Paper 38922, University Library of Munich, Germany.
  12. Chyi, Hau & Zhou, Bo, 2014. "The effects of tuition reforms on school enrollment in rural China," Economics of Education Review, Elsevier, vol. 38(C), pages 104-123.
  13. Messinis, George, 2013. "Returns to education and urban-migrant wage differentials in China: IV quantile treatment effects," China Economic Review, Elsevier, vol. 26(C), pages 39-55.
  14. Ren, Weiwei & Miller, Paul W., 2012. "Changes over time in the return to education in urban China: Conventional and ORU estimates," China Economic Review, Elsevier, vol. 23(1), pages 154-169.
  15. Wang, Le, 2012. "Economic transition and college premium in urban China," China Economic Review, Elsevier, vol. 23(2), pages 238-252.
  16. Vinod Mishra & Russell Smyth, 2012. "It Pays to Be Happy (If You are a Man): Subjective Wellbeing and the Gender Wage Gap in Urban China," Development Research Unit Working Paper Series 51-12, Monash University, Department of Economics.
  17. Su, Biwei & Heshmati, Almas, 2011. "Development and Sources of Labor Productivity in Chinese Provinces," IZA Discussion Papers 6263, Institute for the Study of Labor (IZA).

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