Estimating the External Returns to Education: Evidence from China
AbstractGood understanding on the human capital externalities is important for both policy makers and social science researchers. Economists have speculated for at least a century that the social returns to education may exceed the private returns. In this paper, using the longitudinal data from China Health and Nutrition Survey (CHNS), we examine how individual wage changes associated with the share of college graduates in the same province across years for a person who has never moved by implementing individual fixed effects estimates. The individual fixed effect model shows that the external returns to education in China appear to be negative and on the order of -2%, which might be biased by potential endogeneity. Concerned with this problem, we then implement the IV fixed effect estimates and find positive external returns to education at about 10%. We also find this returns differ across individual heterogeneity.
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Bibliographic InfoPaper provided by School Of Economics, University College Dublin in its series Working Papers with number 201220.
Length: 26 pages
Date of creation: 29 Aug 2012
Date of revision:
Education; Externalities; Spillover; Signalling; China;
Find related papers by JEL classification:
- J0 - Labor and Demographic Economics - - General
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-09 (All new papers)
- NEP-DEV-2012-09-09 (Development)
- NEP-EDU-2012-09-09 (Education)
- NEP-LAB-2012-09-09 (Labour Economics)
- NEP-LMA-2012-09-09 (Labor Markets - Supply, Demand, & Wages)
- NEP-LTV-2012-09-09 (Unemployment, Inequality & Poverty)
- NEP-TRA-2012-09-09 (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.:
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