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Explaining Rising Returns to Education in Urban China in the 1990s

Author

Listed:
  • Xuejun Liu

    (China Center for Economic Research)

  • Albert Park
  • Yaohui Zhao

Abstract

Although theory predicts that international trade will decrease the relative demand for skilled workers in relatively skill-deficit countries, in recent decades many developing countries have experienced rising wage premiums for skilled workers. We examines this puzzle by quantifying the relative importance of different supply and demand factors in explaining the rapid increase in the returns to education experienced by China during the 1990s. Analyzing Chinese urban household survey and census data for six provinces, we find that although changes in the structure of demand did reduce the demand for skilled workers, consistent with trade theory, the magnitude of the effect was modest and more than offset by institutional reforms and technological changes that increased the relative demand for skill.

Suggested Citation

  • Xuejun Liu & Albert Park & Yaohui Zhao, 2010. "Explaining Rising Returns to Education in Urban China in the 1990s," Trade Working Papers 22720, East Asian Bureau of Economic Research.
  • Handle: RePEc:eab:tradew:22720
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    References listed on IDEAS

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    6. David Card & John E. DiNardo, 2002. "Skill-Biased Technological Change and Rising Wage Inequality: Some Problems and Puzzles," Journal of Labor Economics, University of Chicago Press, vol. 20(4), pages 733-783, October.
    7. Meng, Xin & Zhang, Junsen, 2001. "The Two-Tier Labor Market in Urban China: Occupational Segregation and Wage Differentials between Urban Residents and Rural Migrants in Shanghai," Journal of Comparative Economics, Elsevier, pages 485-504.
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    Citations

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    Cited by:

    1. Xin Meng & Kailing Shen & Sen Xue, 2010. "Economic Reform, Education Expansion, and Earnings Inequality for Urban Males in China, 1988-2007," CEPR Discussion Papers 639, Centre for Economic Policy Research, Research School of Economics, Australian National University.
    2. Lili Kang & Fei Peng, 2012. "A selection analysis of returns to education in China," Post-Communist Economies, Taylor & Francis Journals, pages 535-554.
    3. repec:wyi:journl:002165 is not listed on IDEAS
    4. Wang, Le, 2012. "Economic transition and college premium in urban China," China Economic Review, Elsevier, vol. 23(2), pages 238-252.
    5. Lili Kang & Fei Peng, 2012. "A selection analysis of returns to education in China," Post-Communist Economies, Taylor & Francis Journals, pages 535-554.
    6. Xiangcai Meng & Azhong Ye, 2009. "Human Capital Externality, Knowledge Spillover, and Sustainable Economic Growth," Annals of Economics and Finance, Society for AEF, pages 155-198.

    More about this item

    Keywords

    international trade; education; China; urban household survey;

    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General

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