IDEAS home Printed from https://ideas.repec.org/a/eee/streco/v53y2020icp137-148.html
   My bibliography  Save this article

The changing pattern of wage returns to education in post-reform China

Author

Listed:
  • Asadullah, M. Niaz
  • Xiao, Saizi

Abstract

This paper examines the labor market returns to schooling in China during 2010–2015 by using two rounds of the China General Social Survey data. While our OLS estimates based on Mincerian earnings function confirm the importance of human capital in China's post-reform economy, they highlight a number of important changes in the labor market performance of educated workers. The average returns to schooling have declined during the study period, albeit modestly. The fall in returns is much larger in urban locations, coastal regions and among women (from 10.4%, 9.9% and 7.8% in 2010 to 8.3%, 7.8% and 6.3% in 2015 respectively). Workers with university diplomas and good English language skills continue to enjoy a high wage return. These findings are unchanged regardless of model specifications and corrections for endogeneity bias using conventional as well as Lewbel instrumental variable approaches. We discuss the potential explanations for the observed changes and their policy implications.

Suggested Citation

  • Asadullah, M. Niaz & Xiao, Saizi, 2020. "The changing pattern of wage returns to education in post-reform China," Structural Change and Economic Dynamics, Elsevier, vol. 53(C), pages 137-148.
  • Handle: RePEc:eee:streco:v:53:y:2020:i:c:p:137-148
    DOI: 10.1016/j.strueco.2020.01.010
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0954349X19302413
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.strueco.2020.01.010?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Barry Eichengreen & Donghyun Park & Kwanho Shin, 2012. "When Fast-Growing Economies Slow Down: International Evidence and Implications for China," Asian Economic Papers, MIT Press, vol. 11(1), pages 42-87, Winter/Sp.
    2. Minquan Liu & Luodan Xu & Liu Liu, 2004. "Wage-related labour standards and FDI in China: some survey findings from Guangdong province," Pacific Economic Review, Wiley Blackwell, vol. 9(3), pages 225-243, October.
    3. Cristiano Perugini & Ekaterina Selezneva, 2015. "Labour market institutions, crisis and gender earnings gap in Eastern Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(3), pages 517-564, July.
    4. Clive R. Belfield & Inas Rashad Kelly, 2012. "The Benefits of Breast Feeding across the Early Years of Childhood," Journal of Human Capital, University of Chicago Press, vol. 6(3), pages 251-277.
    5. 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.
    6. 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.
    7. Salike, Nimesh, 2016. "Role of human capital on regional distribution of FDI in China: New evidences," China Economic Review, Elsevier, vol. 37(C), pages 66-84.
    8. Francine D. Blau & Lawrence M. Kahn, 2017. "The Gender Wage Gap: Extent, Trends, and Explanations," Journal of Economic Literature, American Economic Association, vol. 55(3), pages 789-865, September.
    9. Inas Kelly & Dhaval Dave & Jody Sindelar & William Gallo, 2014. "The impact of early occupational choice on health behaviors," Review of Economics of the Household, Springer, vol. 12(4), pages 737-770, December.
    10. Meng, Xin & Shen, Kailing & Xue, Sen, 2013. "Economic reform, education expansion, and earnings inequality for urban males in China, 1988–2009," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 227-244.
    11. Anne Case & Christina Paxson & Joseph Ableidinger, 2004. "Orphans in Africa: parental death, poverty, and school enrollment," Demography, Springer;Population Association of America (PAA), vol. 41(3), pages 483-508, August.
    12. Hanushek, Eric A. & Schwerdt, Guido & Wiederhold, Simon & Woessmann, Ludger, 2015. "Returns to skills around the world: Evidence from PIAAC," European Economic Review, Elsevier, vol. 73(C), pages 103-130.
    13. Zhang, Chunni & Xu, Qi & Zhou, Xiang & Zhang, Xiaobo & Xie, Yu, 2014. "Are poverty rates underestimated in China? New evidence from four recent surveys," China Economic Review, Elsevier, vol. 31(C), pages 410-425.
    14. Lin Xiu & Morley Gunderson, 2015. "Occupational segregation and the gender earnings gap in China: devils in the details," International Journal of Manpower, Emerald Group Publishing, vol. 36(5), pages 711-732, August.
    15. repec:wyi:journl:002165 is not listed on IDEAS
    16. Francesco Pastore & Alina Verashchagina, 2011. "When does transition increase the gender wage gap?," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 19(2), pages 333-369, April.
    17. repec:pri:cheawb:case_paxson_orphansafrica is not listed on IDEAS
    18. Jennifer Hunt, 2002. "The Transition in East Germany: When Is a Ten-Point Fall in the Gender Wage Gap Bad News?," Journal of Labor Economics, University of Chicago Press, vol. 20(1), pages 148-169, January.
    19. Appleton, Simon & Song, Lina & Xia, Qingjie, 2005. "Has China crossed the river? The evolution of wage structure in urban China during reform and retrenchment," Journal of Comparative Economics, Elsevier, vol. 33(4), pages 644-663, December.
    20. Chen, Baizhu & Feng, Yi, 2000. "Determinants of economic growth in China: Private enterprise, education, and openness," China Economic Review, Elsevier, vol. 11(1), pages 1-15.
    21. Joseph J. Sabia, 2007. "Reading, Writing, And Sex: The Effect Of Losing Virginity On Academic Performance," Economic Inquiry, Western Economic Association International, vol. 45(4), pages 647-670, October.
    22. Wang, Le, 2012. "Economic transition and college premium in urban China," China Economic Review, Elsevier, vol. 23(2), pages 238-252.
    23. Elaine Liu & Shu Zhang, 2013. "A Meta-Analysis Of The Estimates Of Returns To Schooling In China," Working Papers 201309855, Department of Economics, University of Houston.
    24. repec:pri:rpdevs:case_paxson_orphansafrica.pdf is not listed on IDEAS
    25. Concetta Mendolicchio & Thomas Rhein, 2014. "The gender gap of returns on education across West European countries," International Journal of Manpower, Emerald Group Publishing, vol. 35(3), pages 219-249, May.
    26. Le Wang, 2013. "How Does Education Affect the Earnings Distribution in Urban China?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 75(3), pages 435-454, June.
    27. Card, David, 1999. "The causal effect of education on earnings," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 30, pages 1801-1863, Elsevier.
    28. Psacharopoulos, George, 1994. "Returns to investment in education: A global update," World Development, Elsevier, vol. 22(9), pages 1325-1343, September.
    29. Li, Shi & Whalley, John & Xing, Chunbing, 2014. "China's higher education expansion and unemployment of college graduates," China Economic Review, Elsevier, vol. 30(C), pages 567-582.
    30. repec:pri:rpdevs:case_paxson_orphansafrica is not listed on IDEAS
    31. M Niaz Asadullah & Saizi Xiao, 2019. "Labor Market Returns to Education and English Language Skills in the People's Republic of China: An Update," Asian Development Review, MIT Press, vol. 36(1), pages 80-111, March.
    32. John A. Bishop & Feijun Luo & Fang Wang, 2005. "Economic transition, gender bias, and the distribution of earnings in China," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 13(2), pages 239-259, April.
    33. T. Paul Schultz, 2002. "Wage Gains Associated with Height as a Form of Health Human Capital," American Economic Review, American Economic Association, vol. 92(2), pages 349-353, May.
    34. Chris King-Chi CHAN & Khalid NADVI, 2014. "Changing labour regulations and labour standards in China: Retrospect and challenges," International Labour Review, International Labour Organization, vol. 153(4), pages 513-534, December.
    35. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
    36. Guo, Qian & Sun, Wenkai, 2014. "Economic returns to English proficiency for college graduates in mainland China," China Economic Review, Elsevier, vol. 30(C), pages 290-300.
    37. Song, Yang, 2014. "What should economists know about the current Chinese hukou system?," China Economic Review, Elsevier, vol. 29(C), pages 200-212.
    38. Xiaolei Qian & Russell Smyth, 2008. "Measuring regional inequality of education in China: widening coast-inland gap or widening rural-urban gap?," Journal of International Development, John Wiley & Sons, Ltd., vol. 20(2), pages 132-144.
    39. Paul Gertler & David I. Levine & Minnie Ames, 2004. "Schooling and Parental Death," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 211-225, February.
    40. LEE, Jong-Wha & Wie, Dainn, 2017. "Wage Structure and Gender Earnings Differentials in China and India," World Development, Elsevier, vol. 97(C), pages 313-329.
    41. John WHALLEY & Chunbing XING, 2014. "The regional distribution of skill premia in urban China: Implications for growth and inequality," International Labour Review, International Labour Organization, vol. 153(3), pages 395-419, September.
    42. Michael P. Murray, 2006. "Avoiding Invalid Instruments and Coping with Weak Instruments," Journal of Economic Perspectives, American Economic Association, vol. 20(4), pages 111-132, Fall.
    43. Barry Bosworth & Susan M. Collins, 2008. "Accounting for Growth: Comparing China and India," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 45-66, Winter.
    44. Zhang, Huafeng, 2010. "The Hukou system's constraints on migrant workers' job mobility in Chinese cities," China Economic Review, Elsevier, vol. 21(1), pages 51-64, March.
    45. Francesco Pastore, 2010. "The gender gap in early career in Mongolia," International Journal of Manpower, Emerald Group Publishing, vol. 31(2), pages 188-207, May.
    46. Wenkai Sun & Xianghong Wang & Xiaoxi Zhang, 2015. "Minimum wage effects on employment and working time of Chinese workers——evidence based on CHNS," IZA Journal of Labor & Development, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 4(1), pages 1-22, December.
    47. Bishop, John A. & Chiou, Jong-Rong, 2004. "Economic transformation and earnings inequality in China and Taiwan," Journal of Asian Economics, Elsevier, vol. 15(3), pages 549-562, June.
    48. repec:pri:cheawb:case_paxson_orphansafrica.pdf is not listed on IDEAS
    49. Knight, John & Li, Shi, 2005. "Wages, firm profitability and labor market segmentation in urban China," China Economic Review, Elsevier, vol. 16(3), pages 205-228.
    50. 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.
    51. 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, vol. 73(1), pages 315-328, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chen, Jie & Pastore, Francesco, 2021. ""Study Hard and Make Progress Every Day": Updates on Returns to Education in China," IZA Discussion Papers 14139, Institute of Labor Economics (IZA).
    2. Ichiro Iwasaki & Xinxin Ma, 2020. "Gender wage gap in China: a large meta-analysis," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-19, December.
    3. Emran, M. Shahe & Jiang, Hanchen & Shilpi, Forhad, 2020. "Gender Bias and Intergenerational Educational Mobility: Theory and Evidence from China and India," GLO Discussion Paper Series 497, Global Labor Organization (GLO).
    4. Iwasaki, Ichiro & Ma, Xinxin, 2020. "Gender Wage Gap in China: A Large Meta-Analysis," CEI Research Paper Series 2020-5, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    5. Chen, Jie & Pastore, Francesco, 2021. "Does vocational education pay better, or worse, than academic education?," GLO Discussion Paper Series 858, Global Labor Organization (GLO).
    6. Mamiko Takeuchi, 2021. "Determinants of Earnings and Gender Earnings Gaps among Highly Educated Workers within Major Cities in Asian Countries," Asian Economic Journal, East Asian Economic Association, vol. 35(2), pages 166-186, June.
    7. Ma, Xinxin & Iwasaki, Ichiro & 岩﨑, 一郎, 2021. "Return to Schooling in China: A Large Meta-Analysis," CEI Working Paper Series 2020-12, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. M Niaz Asadullah & Saizi Xiao, 2019. "Labor Market Returns to Education and English Language Skills in the People's Republic of China: An Update," Asian Development Review, MIT Press, vol. 36(1), pages 80-111, March.
    2. Gustafsson, Björn & Wan, Haiyuan, 2020. "Wage growth and inequality in urban China: 1988–2013," China Economic Review, Elsevier, vol. 62(C).
    3. 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.
    4. Björn Gustafsson & Haiyuan Wan, 2018. "Wage growth and inequality in urban China: 1988–2013," WIDER Working Paper Series 163, World Institute for Development Economic Research (UNU-WIDER).
    5. 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.
    6. 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.
    7. Chen, Jie & Pastore, Francesco, 2021. ""Study hard and make progress every day": Updates on returns to education in China," GLO Discussion Paper Series 787, Global Labor Organization (GLO).
    8. Björn Gustafsson & Haiyuan Wan, 2018. "Wage growth and inequality in urban China: 1988-2013," WIDER Working Paper Series wp-2018-163, World Institute for Development Economic Research (UNU-WIDER).
    9. 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.
    10. 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.
    11. ZHONG, Hai, 2015. "An over time analysis on the mechanisms behind the education–health gradients in China," China Economic Review, Elsevier, vol. 34(C), pages 135-149.
    12. Katie Meara & Francesco Pastore & Allan Webster, 2020. "The gender pay gap in the USA: a matching study," Journal of Population Economics, Springer;European Society for Population Economics, vol. 33(1), pages 271-305, January.
    13. Lucia Mateos & Ines Murillo & Maria del Mar Salinas, 2014. "Desajuste educativo y competencias cognitivas: efectos sobre los salarios," Hacienda Pública Española / Review of Public Economics, IEF, vol. 210(3), pages 85-108, September.
    14. Chi, Wei & Li, Bo, 2014. "Trends in China’s gender employment and pay gap: Estimating gender pay gaps with employment selection," Journal of Comparative Economics, Elsevier, vol. 42(3), pages 708-725.
    15. de Araujo, Pedro & Lagos, Stephen, 2013. "Self-esteem, education, and wages revisited," Journal of Economic Psychology, Elsevier, vol. 34(C), pages 120-132.
    16. Pham, Thai-Hung & Reilly, Barry, 2007. "The gender pay gap in Vietnam, 1993-2002: A quantile regression approach," Journal of Asian Economics, Elsevier, vol. 18(5), pages 775-808, October.
    17. Fortin, Bernard & Ragued, Safa, 2017. "Does temporary interruption in postsecondary education induce a wage penalty? Evidence from Canada," Economics of Education Review, Elsevier, vol. 58(C), pages 108-122.
    18. Jean-Noël Senne, 2014. "Death and schooling decisions over the short and long run in rural Madagascar," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(2), pages 497-528, April.
    19. Wang, Le, 2012. "Economic transition and college premium in urban China," China Economic Review, Elsevier, vol. 23(2), pages 238-252.
    20. Liang, Wenquan & Xue, Sen, 2021. "Pandemics and Intergenerational Mobility of Education: Evidence from the 2003 Severe Acute Respiratory Syndrome (SARS) Epidemic in China," GLO Discussion Paper Series 779, Global Labor Organization (GLO).

    More about this item

    Keywords

    Gender gap; Schooling; English-language premium; Selection bias; Post-reform China;
    All these keywords.

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:streco:v:53:y:2020:i:c:p:137-148. 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: . General contact details of provider: http://www.elsevier.com/locate/inca/525148 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/525148 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.