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Reporting errors, ability heterogeneity, and returns to schooling in China

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  • Haizheng Li
  • Yi Luo

Abstract

This study is aimed at providing a more accurate estimate of the returns to schooling in China by controlling for unobserved ability heterogeneity and measurement errors. We identify a unique instrument to correct for the omitted ability bias. We find that the attenuation bias caused by measurement error dominates the omitted ability bias in the OLS estimation. Based on the GMM estimation, for young workers in China, the return to schooling is 15.0% overall and 16.9% for women. Copyright 2004 Blackwell Publishing Ltd

Suggested Citation

  • Haizheng Li & Yi Luo, 2004. "Reporting errors, ability heterogeneity, and returns to schooling in China," Pacific Economic Review, Wiley Blackwell, vol. 9(3), pages 191-207, October.
  • Handle: RePEc:bla:pacecr:v:9:y:2004:i:3:p:191-207
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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," Monash Economics Working Papers 33-12, Monash University, Department of Economics.
    2. Wang, Xiaojun & Fleisher, Belton M. & Li, Haizheng & Li, Shi, 2014. "Access to college and heterogeneous returns to education in China," Economics of Education Review, Elsevier, vol. 42(C), pages 78-92.
    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. Chris SAKELLARIOU & Fang ZHENG, 2014. "Returns to Schooling for Urban Residents and Migrants in China: New IV Estimates and a Comprehensive Investigation," Economic Growth Centre Working Paper Series 1407, Nanyang Technological University, School of Social Sciences, Economic Growth Centre.
    5. Gao, Wenshu & Smyth, Russell, 2011. "Economic returns to speaking 'standard Mandarin' among migrants in China's urban labour market," Economics of Education Review, Elsevier, vol. 30(2), pages 342-352, April.
    6. CHEN, Guifu & HAMORI, Shigeyuki, 2009. "Economic returns to schooling in urban China: OLS and the instrumental variables approach," China Economic Review, Elsevier, vol. 20(2), pages 143-152, June.
    7. Mishra, Vinod & Smyth, Russell, 2015. "Estimating returns to schooling in urban China using conventional and heteroskedasticity-based instruments," Economic Modelling, Elsevier, vol. 47(C), pages 166-173.
    8. Andersson, Roland & Nabavi Larijani, Pardis & Wilhelmsson, Mats, 2013. "The impact of vocational education and training on income in Sweden," Working Paper Series 13/4, Royal Institute of Technology, Department of Real Estate and Construction Management & Centre for Banking and Finance (cefin).
    9. Chen, Yuanyuan & Feng, Shuaizhang, 2009. "Parental Education and Wages: Evidence from China," IZA Discussion Papers 4218, Institute for the Study of Labor (IZA).
    10. Lu, Zhigang & Song, Shunfeng, 2006. "Rural-urban migration and wage determination: The case of Tianjin, China," China Economic Review, Elsevier, vol. 17(3), pages 337-345.
    11. Wang, Le, 2013. "Estimating returns to education when the IV sample is selective," Labour Economics, Elsevier, vol. 21(C), pages 74-85.
    12. Zhu, Rong, 2011. "Individual heterogeneity in returns to education in urban China during 1995-2002," Economics Letters, Elsevier, vol. 113(1), pages 84-87, October.
    13. Zhong, Hai, 2011. "Returns to higher education in China: What is the role of college quality?," China Economic Review, Elsevier, vol. 22(2), pages 260-275, June.
    14. Lee, Soohyung & Malin, Benjamin A., 2013. "Education's role in China's structural transformation," Journal of Development Economics, Elsevier, vol. 101(C), pages 148-166.
    15. Wang, Le, 2012. "Economic transition and college premium in urban China," China Economic Review, Elsevier, vol. 23(2), pages 238-252.
    16. Mishra, Vinod & Smyth, Russell, 2013. "Economic returns to schooling for China's Korean minority," Journal of Asian Economics, Elsevier, vol. 24(C), pages 89-102.
    17. 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.
    18. Lin Xiu & Morley Gunderson, 2013. "Credential Effects and the Returns to Education in China," LABOUR, CEIS, vol. 27(2), pages 225-248, June.
    19. Kang, Lili & Peng, Fei, 2012. "Siblings, public facilities and education returns in China," MPRA Paper 38922, University Library of Munich, Germany.
    20. repec:jfr:ijfr11:v:8:y:2017:i:3:p:85-104 is not listed on IDEAS
    21. Sefa Awaworyi & Vinod Mishra, 2014. "Returns to Education in China: A Meta-analysis," Monash Economics Working Papers 41-14, Monash University, Department of Economics.
    22. 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.
    23. Castro Campos, Bente & Ren, Yanjun & Petrick, Martin, 2016. "The impact of education on income inequality between ethnic minorities and Han in China," China Economic Review, Elsevier, vol. 41(C), pages 253-267.

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