The Returns to Education in China: Evidence from the 1986 Compulsory Education Law
AbstractAs China transforms from a socialist planned economy to a market-oriented economy, its returns to education are expected to rise to meet those found in middle-income established market economies. This study employs a plausible instrument for education: the China Compulsory Education Law of 1986. We use differences among provinces in the dates of effective implementation of the compulsory education law to show that the law raised overall educational attainment in China by about 0.8 years of schooling. We then use this instrumental variable to control for the endogeneity of education and estimate the returns to an additional year of schooling in 1997-2006. Results imply that the overall returns to education are approximately 20 percent per year on average in contemporary China, fairly consistent with returns found in most industrialized economies. Returns differ among subpopulations; they increase after controlling for endogeneity of education.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18189.
Date of creation: Jun 2012
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Note: ED LS
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Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
- P52 - Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-07-08 (All new papers)
- NEP-DEV-2012-07-08 (Development)
- NEP-EDU-2012-07-08 (Education)
- NEP-LAB-2012-07-08 (Labour Economics)
- NEP-LMA-2012-07-08 (Labor Markets - Supply, Demand, & Wages)
- NEP-TRA-2012-07-08 (Transition Economics)
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- Vinod Mishra & Russell Smyth, 2012. "Returns to Schooling in Urban China: New Evidence Using Heteroskedasticity Restrictions to Obtain Identification Without Exclusion Restrictions," Monash Economics Working Papers 33-12, Monash University, Department of Economics.
- 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," Monash Economics Working Papers 50-12, Monash University, Department of Economics.
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