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Sorting, Selection, and Transformation of the Return to College Education In China

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  • Belton M. Fleisher

    ()

  • Haizheng Li
  • Shi Li
  • Xiaojun Wang

Abstract

We estimate selection and sorting effects on the evolution of the private return to schooling for college graduates during China’s reform between 1988 and 2002. We pay special attention to the changing role of sorting by ability versus budget-constraint effects as China’s education policy has changed from one in which the bulk of direct costs are paid by government for students who pass a rigid set of test to one in which freedom of choice is increasingly the rule for those who can afford to pay for tuition and living expenses while acquiring higher education. We find evidence of substantial sorting gains under the traditional system but that gains have diminished and even become negative as schooling choices widened and participation has become subject to increasing direct private costs. We take this as evidence consistent with the influence of financial constraints on decisions to attend college.

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File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp756.pdf
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Bibliographic Info

Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number wp756.

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Length: pages
Date of creation: 01 Mar 2000
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Handle: RePEc:wdi:papers:2005-756

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Keywords: Return to schooling; sorting gains; heterogeneity; financial constraints; comparative advantage; China;

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References

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  1. Pedro Carneiro & James J. Heckman, 2002. "The Evidence on Credit Constraints in Post-Secondary Schooling," NBER Working Papers 9055, National Bureau of Economic Research, Inc.
  2. Yang, Dennis Tao, 2002. "What has caused regional inequality in China?," China Economic Review, Elsevier, Elsevier, vol. 13(4), pages 331-334, December.
  3. Belton M. Fleisher & Xiaojun Wang, 2004. "Returns to Schooling in China Under Planning and Reform," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 2004-704, William Davidson Institute at the University of Michigan.
  4. Fleisher, Belton M. & Chen, Jian, 1997. "The Coast-Noncoast Income Gap, Productivity, and Regional Economic Policy in China," Journal of Comparative Economics, Elsevier, vol. 25(2), pages 220-236, October.
  5. 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, Elsevier, vol. 73(1), pages 315-328, February.
  6. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," NBER Working Papers 6699, National Bureau of Economic Research, Inc.
  7. Orazem, Peter F & Vodopivec, Milan, 1995. "Winners and Losers in Transition: Returns to Education, Experience, and Gender in Slovenia," World Bank Economic Review, World Bank Group, World Bank Group, vol. 9(2), pages 201-30, May.
  8. Meng,Xin, 2000. "Labour Market Reform in China," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521771269.
  9. Bjorklund, Anders & Moffitt, Robert, 1987. "The Estimation of Wage Gains and Welfare Gains in Self-selection," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 42-49, February.
  10. Daniel Munich & Jan Svejnar & Daniel Munich, 1999. "Returns to Human Capital under the Communist Wage Grid and During the Transition to a Market Economy," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan 272, William Davidson Institute at the University of Michigan.
  11. Knight, J. & Lina, S., 1990. "The Determinants Of Urban Income Inequality In China," Economics Series Working Papers, University of Oxford, Department of Economics 9991, University of Oxford, Department of Economics.
  12. 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).
  13. 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.
  14. Fleisher, Belton M & Dong, Keyong & Liu, Yunhua, 1996. "Education, Enterprise Organization, and Productivity in the Chinese Paper Industry," Economic Development and Cultural Change, University of Chicago Press, University of Chicago Press, vol. 44(3), pages 571-87, April.
  15. Li, Haizheng, 2003. "Economic transition and returns to education in China," Economics of Education Review, Elsevier, Elsevier, vol. 22(3), pages 317-328, June.
  16. 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.
  17. Fleisher, Belton M. & Wang, Xiaojun, 2001. "Efficiency Wages and Work Incentives in Urban and Rural China," Journal of Comparative Economics, Elsevier, vol. 29(4), pages 645-662, December.
  18. Hannum, Emily & Wang, Meiyan, 2006. "Geography and educational inequality in China," China Economic Review, Elsevier, Elsevier, vol. 17(3), pages 253-265.
  19. Meng, Xin & Gregory, R G, 2002. "The Impact of Interrupted Education on Subsequent Educational Attainment: A Cost of the Chinese Cultural Revolution," Economic Development and Cultural Change, University of Chicago Press, University of Chicago Press, vol. 50(4), pages 935-59, July.
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Citations

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Cited by:
  1. 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, Monash University, Department of Economics 33-12, Monash University, Department of Economics.
  2. Yao Li & John Whalley & Shunming Zhang & Xiliang Zhao, 2008. "The Higher Educational Transformation of China and Its Global Implications," NBER Working Papers 13849, National Bureau of Economic Research, Inc.
  3. 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, Monash University, Department of Economics 50-12, Monash University, Department of Economics.
  4. Belton Fleisher & Haizheng Li & Min Qiang Zhao, 2007. "Human Capital, Economic Growth, and Regional Inequality in China," William Davidson Institute Working Papers Series, William Davidson Institute at the University of Michigan wp857, William Davidson Institute at the University of Michigan.
  5. Yuanyuan Chen & Shuaizhang Feng, 2011. "Parental education and wages: Evidence from China," Frontiers of Economics in China, Springer, Springer, vol. 6(4), pages 568-591, December.
  6. Chen, Yuanyuan & Feng, Shuaizhang, 2009. "Parental Education and Wages: Evidence from China," IZA Discussion Papers 4218, Institute for the Study of Labor (IZA).
  7. Wang, Le, 2012. "Economic transition and college premium in urban China," China Economic Review, Elsevier, Elsevier, vol. 23(2), pages 238-252.
  8. Agnes E. Walker & Stephen Colagiuri, 2011. "Cost-Benefit Model System of Chronic Diseases in Australia to Assess and Rank Prevention and Treatment Options," International Journal of Microsimulation, Interational Microsimulation Association, vol. 4(3), pages 57-70.

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