The long-term impact of higher education: Evidence from the Gaokao reinstatement in China

Whereas there is a large literature evaluating the impacts of education, most of the focus has been on getting to universal primary enrollment and understanding the returns to basic education; but it misses the major shifts toward higher education in many fast-growing parts of the developing world over the last 20 years. In this paper, I study the returns to higher education in China using the reinstatement of the National College Entrance Examination in 1977 as a natural experiment, investigating the causal impacts of higher education on later life outcomes and well-being. Through a combination of regression discontinuity and difference-in-difference methods, I find that cohorts that were more likely to complete high school and obtain a college education as a result of the reform were no more likely to be employed, but were more likely to have a high-socioeconomic (SES) occupation in their early 30s, and lesser of the same in their 40s. Cohorts with higher education work for fewer days in a week, and, on average, earn a higher monthly income by 56 percent in their late 40s.