Can educational expansion improve income inequality? Evidences from the CHNS 1997 and 2006 data
Rapid education expansion and rising income inequality are two striking phenomena occurring in China during the transitional period. Using the China Health and Nutrition Survey (CHNS) data collected in 1997 and 2006, this paper studies how education affects individual earnings during the transitional process. We find that education accounts for only a small fraction of the personal earnings and income gap between different groups. We analyze the underlying mechanism of the impact of education on earning. More educated people tend to enter state-owned sectors, have a low probability of changing jobs in the labor market and work less time; all of these will have a pronounced impact on earning and income inequality. Quantile regression analysis shows that the low-income group's education return rate is lower, which helps little in narrowing the income gap. We decompose the earning gap into four factors: population effect, price effect, labor choice effect and unobservable effect. In explaining the earning gap in China, the price effect is more important than the population effect. The labor choice effect is also significant. We conclude that increasing educational expenditure with no complementary measures such as reforming the education system and establishing a competitive labor market helps less in reducing income inequality.
Volume (Year): 34 (2010)
Issue (Month): 4 (December)
|Contact details of provider:|| Postal: |
Phone: +49-(0)941-943 54 10
Fax: +49-(0)941-943 54 27
Web page: http://www.elsevier.com/locate/inca/621171
More information through EDIRC
References listed on IDEAS
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.:
- 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.
- Thomas Lemieux, 2006.
"Postsecondary Education and Increasing Wage Inequality,"
American Economic Review,
American Economic Association, vol. 96(2), pages 195-199, May.
- Thomas Lemieux, 2006. "Post-Secondary Education and Increasing Wage Inequality," NBER Working Papers 12077, National Bureau of Economic Research, Inc.
- Ravallion, Martin & Chen, Shaohua, 2007.
"China's (uneven) progress against poverty,"
Journal of Development Economics,
Elsevier, vol. 82(1), pages 1-42, January.
- Ram, Rati, 1990. "Educational Expansion and Schooling Inequality: International Evidence and Some Implications," The Review of Economics and Statistics, MIT Press, vol. 72(2), pages 266-74, May.
- James Heckman, 2000.
"Policies to Foster Human Capital,"
0028, Harris School of Public Policy Studies, University of Chicago.
- Martins, Pedro S. & Pereira, Pedro T., 2004. "Does education reduce wage inequality? Quantile regression evidence from 16 countries," Labour Economics, Elsevier, vol. 11(3), pages 355-371, June.
- Heckman, James J., 2005. "China's human capital investment," China Economic Review, Elsevier, vol. 16(1), pages 50-70.
- Igal Hendel & Joel Shapiro & Paul Willen, 2003.
"Educational Opportunity and Income Inequality,"
89, Barcelona Graduate School of Economics.
- Paul Willen & Igal Hendel & Joel Shapiro, 2004. "Educational Opportunity and Income Inequality," NBER Working Papers 10879, National Bureau of Economic Research, Inc.
- Igal Hendel & Joel Shapiro & Paul Willen, 2004. "Educational opportunity and income inequality," Public Policy Discussion Paper 04-5, Federal Reserve Bank of Boston.
- Li, Haizheng, 2003. "Economic transition and returns to education in China," Economics of Education Review, Elsevier, vol. 22(3), pages 317-328, June.
- Anos Casero, Paloma & Seshan, Ganesh, 2006. "Public-private sector wage differentials and returns to education in Djibouti," Policy Research Working Paper Series 3923, The World Bank.
- Caroline M. Hoxby & Bridget Terry, 1999. "Explaining Rising Income and wage Inequality Among the College Educated," NBER Working Papers 6873, National Bureau of Economic Research, Inc.
- Philip A. Trostel, 2004. "Returns to scale in producing human capital from schooling," Oxford Economic Papers, Oxford University Press, vol. 56(3), pages 461-484, July.
- Keith Griffin & Azizur Rahman Khan & Carl Riskin, 1999. "Income Distribution in Urban China during the Period of Economic Reform and Globalization," American Economic Review, American Economic Association, vol. 89(2), pages 296-300, May.
- Saccone Donatella, 2008. "Educational Inequality and Educational Poverty. the Chinese Case in the Period 1975-2004," Department of Economics and Statistics Cognetti de Martiis. Working Papers 200808, University of Turin.
When requesting a correction, please mention this item's handle: RePEc:eee:ecosys:v:34:y:2010:i:4:p:397-412. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If references are entirely missing, you can add them using this form.