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Access to Higher Education and Inequality: The Chinese Experiment

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Author Info

  • Wang, Xiaojun

    ()
    (University of Hawaii at Manoa)

  • Fleisher, Belton M.

    ()
    (Ohio State University)

  • Li, Haizheng

    ()
    (Georgia Tech)

  • Li, Shi

    ()
    (Beijing Normal University)

Abstract

We apply a semi-parametric latent variable model to estimate selection and sorting effects on the evolution of private returns to schooling for college graduates during China’s reform between 1988 and 2002. We find that there were substantial sorting gains under the traditional system, but they have decreased drastically and become negligible in the most recent data. We take this as evidence of growing influence of private financial constraints on decisions to attend college as tuition costs have risen and the relative importance of government subsidies has declined. The main policy implication of our results is that labor and education reform without concomitant capital market reform and government support for the financially disadvantaged exacerbates increases in inequality inherent in elimination of the traditional “wage-grid”.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2823.

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Length: 45 pages
Date of creation: Jun 2007
Date of revision:
Handle: RePEc:iza:izadps:dp2823

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Related research

Keywords: China; heterogeneity; financial constraints; sorting gains; selection bias; return to schooling; comparative advantage;

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References

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  1. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, Econometric Society, vol. 66(5), pages 1017-1098, September.
  2. 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.
  3. 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.
  4. Dennis Tao Yang, 1999. "Urban-Biased Policies and Rising Income Inequality in China," American Economic Review, American Economic Association, American Economic Association, vol. 89(2), pages 306-310, May.
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  6. 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.
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Citations

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Cited by:
  1. Wang, Le, 2011. "How Does Education Affect the Earnings Distribution in Urban China?," IZA Discussion Papers 6173, Institute for the Study of Labor (IZA).
  2. Pedro Carneiro & Michael Lokshin & Cristobal Ridao-Cano & Nithin Umapathi, 2011. "Average and marginal returns to upper secondary schooling in Indonesia," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP36/11, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  3. Wang, Le, 2012. "Economic transition and college premium in urban China," China Economic Review, Elsevier, Elsevier, vol. 23(2), pages 238-252.
  4. Cui, Yuling & Nahm, Daehoon & Tani, Massimiliano, 2013. "Earnings Differentials and Returns to Education in China, 1995-2008," IZA Discussion Papers 7349, Institute for the Study of Labor (IZA).
  5. Haizheng Li, 2010. "Higher Education in China: Complement or Competition to US Universities?," NBER Chapters, in: American Universities in a Global Market, pages 269-304 National Bureau of Economic Research, Inc.
  6. Wang, Le, 2012. "Estimating Returns to Education when the IV Sample is Selective," IZA Discussion Papers 7103, Institute for the Study of Labor (IZA).
  7. Heckman, James J. & Yi, Junjian, 2012. "Human Capital, Economic Growth, and Inequality in China," IZA Discussion Papers 6550, Institute for the Study of Labor (IZA).
  8. David Mayston & Juan Yang, 2012. "Education, Risk and Efficiency in Human Capital Investment," Discussion Papers, Department of Economics, University of York 12/15, Department of Economics, University of York.
  9. Liu, Qian, 2012. "Unemployment and labor force participation in urban China," China Economic Review, Elsevier, Elsevier, vol. 23(1), pages 18-33.

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