How Does Education Affect the Earnings Distribution in Urban China?
AbstractChina's phenomenal growth is accompanied by both relatively low level of standards of living and high inequality. It is widely believe that investing in education could be an effective strategy to promote higher standards of living as well as to reduce inequality. However, little is known about whether this belief is empirically supported. To this end, we employ a recently developed distributional approach to estimate returns to education across the whole earnings distribution in urban China during economic transition. We find that returns to education are generally more pronounced for individuals in the lower tail of the earnings distribution than for those in the upper tail, in stark contrast to the results found in developed countries. Our result implies that education indeed reduces earnings inequality while increasing individuals' earnings. We also find that the returns to education are uniformly larger for women than for men across the distribution. The results suggest the presence of added effects of education on earnings, as opposed to productivity-enhancing effects, for disadvantaged groups. Finally, we find that rates of educational return increased over time for all parts of the earnings distribution.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6173.
Length: 51 pages
Date of creation: Nov 2011
Date of revision:
Publication status: published online in: Oxford Bulletin of Economics and Statistics, 2012, [Early View]
Contact details of provider:
Postal: IZA, P.O. Box 7240, D-53072 Bonn, Germany
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Other versions of this item:
- Le Wang, 2013. "How Does Education Affect the Earnings Distribution in Urban China?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(3), pages 435-454, 06.
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J7 - Labor and Demographic Economics - - Labor Discrimination
- J15 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
- C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-12-13 (All new papers)
- NEP-EDU-2011-12-13 (Education)
- NEP-LAB-2011-12-13 (Labour Economics)
- NEP-LMA-2011-12-13 (Labor Markets - Supply, Demand, & Wages)
- NEP-TRA-2011-12-13 (Transition Economics)
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.:
- Henderson, Daniel J. & Polachek, Solomon & Wang, Le, 2011.
"Heterogeneity in Schooling Rates of Return,"
IZA Discussion Papers
5662, Institute for the Study of Labor (IZA).
- Schennach, Susanne M., 2008. "Quantile Regression With Mismeasured Covariates," Econometric Theory, Cambridge University Press, vol. 24(04), pages 1010-1043, August.
- Fleisher, Belton M. & Wang, Xiaojun, 2004. "Skill differentials, return to schooling, and market segmentation in a transition economy: the case of Mainland China," Journal of Development Economics, Elsevier, vol. 73(1), pages 315-328, February.
- Fan, Shenggen & Kanbur, Ravi & Zhang, Xiaobo, 2008. "Regional Inequality In China: An Overview," Working Papers 51157, Cornell University, Department of Applied Economics and Management.
- Yang, Dennis T. & Chen, Vivian & Monarch, Ryan, 2010.
"Rising Wages: Has China Lost Its Global Labor Advantage?,"
IZA Discussion Papers
5008, Institute for the Study of Labor (IZA).
- DennisTao Yang & VivianWeijia Chen & Ryan Monarch, 2010. "Rising Wages: Has China Lost Its Global Labor Advantage?," Pacific Economic Review, Wiley Blackwell, vol. 15(4), pages 482-504, October.
- Dennis Tao Yang & Vivian Chen & Ryan Monarch, 2009. "Rising Wages: Has China Lost Its Global Labor Advantage?," Economics Program Working Papers 09-03, The Conference Board, Economics Program.
- Roger Koenker & Kevin F. Hallock, 2001.
Journal of Economic Perspectives,
American Economic Association, vol. 15(4), pages 143-156, Fall.
- Colm Harmon & Vincent Hogan & Ian Walker, 2001.
"Dispersion in the Economic Return to Schooling,"
200116, School Of Economics, University College Dublin.
- 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.
- Belton M. Fleisher & Klara Sabirianova Peter & Xiaojun Wang, 2004. "Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia," William Davidson Institute Working Papers Series 2004-703, William Davidson Institute at the University of Michigan.
- Fleisher, Belton M. & Peter, Klara Sabirianova & Wang, Xiaojun, 2004. "Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia," IZA Discussion Papers 1182, Institute for the Study of Labor (IZA).
- Joshua Angrist & Victor Chernozhukov & Iván Fernández-Val, 2006.
"Quantile Regression under Misspecification, with an Application to the U.S. Wage Structure,"
Econometric Society, vol. 74(2), pages 539-563, 03.
- Joshua Angrist & Victor Chernozhukov & Ivan Fernandez-Val, 2004. "Quantile Regression under Misspecification, with an Application to the U.S. Wage Structure," NBER Working Papers 10428, National Bureau of Economic Research, Inc.
- Wang, Xiaojun & Fleisher, Belton M. & Li, Haizheng & Li, Shi, 2007.
"Access to Higher Education and Inequality: The Chinese Experiment,"
IZA Discussion Papers
2823, Institute for the Study of Labor (IZA).
- Belton Fleisher & Xiaojun Wang & Haizheng Li & Shi Li, 2009. "Access to Higher Education and Inequality: The Chinese Experiment," Working Papers 09-02, Ohio State University, Department of Economics.
- Millimet Daniel L & Wang Le, 2006. "A Distributional Analysis of the Gender Earnings Gap in Urban China," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-50, February.
- Patrinos, Harry Anthony & Ridao-Cano, Cris & Sakellariou, Chris, 2006. "Estimating the returns to education : accounting for heterogeneity in ability," Policy Research Working Paper Series 4040, The World Bank.
- Chernozhukov, Victor & Hansen, Christian, 2008. "Instrumental variable quantile regression: A robust inference approach," Journal of Econometrics, Elsevier, vol. 142(1), pages 379-398, January.
- Omar Arias & Kevin F. Hallock & Walter Sosa Escudero, 1999.
"Individual Heterogeneity in the Returns to Schooling: Instrumental Variables Quantile Regression using Twins Data,"
Department of Economics, Working Papers
016, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.
- Omar Arias & Walter Sosa-Escudero & Kevin F. Hallock, 2001. "Individual heterogeneity in the returns to schooling: instrumental variables quantile regression using twins data," Empirical Economics, Springer, vol. 26(1), pages 7-40.
- John Gibson & Bonggeun Kim, 2007. "Measurement Error in Long-term Retrospective Recall Surveys Of Earnings," Working Papers in Economics 07/03, University of Waikato, Department of Economics.
- Zhong Zhao, 2005. "Migration, Labor Market Flexibility, and Wage Determination in China: A Review," Labor and Demography 0507009, EconWPA.
- Fleisher, Belton M. & Hu, Yifan & Li, Haizheng & Kim, Seonghoon, 2011. "Economic transition, higher education and worker productivity in China," Journal of Development Economics, Elsevier, vol. 94(1), pages 86-94, January.
- Giles, John & Park, Albert & Wang, Meiyan, 2008. "The great proletarian cultural revolution, disruptions to education, and returns to schooling in urban China," Policy Research Working Paper Series 4729, The World Bank.
- Martins, Pedro S. & Pereira, Pedro T., 2004. "Does education reduce wage inequality? Quantile regression evidence from 16 countries," Labour Economics, Elsevier, vol. 11(3), pages 355-371, June.
- 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.
- Chernozhukov, Victor & Hansen, Christian & Jansson, Michael, 2007. "Inference approaches for instrumental variable quantile regression," Economics Letters, Elsevier, vol. 95(2), pages 272-277, May.
- 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).
- James J. Heckman & Junjian Yi, 2012. "Human Capital, Economic Growth, and Inequality in China," NBER Working Papers 18100, National Bureau of Economic Research, Inc.
- Sequeira, Tiago & Santos, Marcelo & Ferreira-Lopes, Alexandra, 2014. "Income Inequality, TFP, and Human Capital," MPRA Paper 55471, University Library of Munich, Germany.
- Wang, Le, 2013.
"Estimating returns to education when the IV sample is selective,"
Elsevier, vol. 21(C), pages 74-85.
- Wang, Le, 2012. "Estimating Returns to Education when the IV Sample is Selective," IZA Discussion Papers 7103, Institute for the Study of Labor (IZA).
- Simone Balestra & Uschi Backes-Gellner, 2013. "Heterogeneous Returns to Education Over the Wage Distribution: Who Profits the Most?," Economics of Education Working Paper Series 0091, University of Zurich, Institute for Strategy and Business Economics (ISU).
- 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.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak).
If references are entirely missing, you can add them using this form.