IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp12954.html
   My bibliography  Save this paper

Higher Education Expansion, the Hukou System, and Returns to Education in China

Author

Listed:
  • Huang, Bin

    (Nanjing University of Finance and Economics)

  • Zhu, Yu

    (University of Dundee)

Abstract

China experienced a near 5-fold increase in annual Higher Education (HE) enrolment in the decade starting in 1999. Using the China Household Finance Survey, we show that the expansion has exacerbated the large pre-existing urban-rural gap in educational attainment underpinned by the hukou (household registration) system. We then instrument years of schooling using the interaction of childhood urban hukou status and the timing of the expansion, which is analogous to a Difference-in-Differences estimator which uses rural students to control for any common time trend. The 2SLS estimates of 17% and 12% for men and women respectively are substantially larger than their OLS counterparts of 5% and 6%, both allowing for county fixed-effects. Our 2SLS results can be interpreted as a Local Average Treatment Effect (LATE), i.e. the average treatment effect of HE attendance on earnings for urban students who enrolled in HE as a result of the higher education expansion.

Suggested Citation

  • Huang, Bin & Zhu, Yu, 2020. "Higher Education Expansion, the Hukou System, and Returns to Education in China," IZA Discussion Papers 12954, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12954
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp12954.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Ian Walker & Yu Zhu, 2008. "The College Wage Premium and the Expansion of Higher Education in the UK," Scandinavian Journal of Economics, Wiley Blackwell, vol. 110(4), pages 695-709, December.
    2. Guo, Yumei & Song, Yang & Chen, Qianmiao, 2019. "Impacts of education policies on intergenerational education mobility in China," China Economic Review, Elsevier, vol. 55(C), pages 124-142.
    3. Richard Blundell & David A. Green & Wenchao (Michelle) Jin, 2016. "The UK wage premium puzzle: how did a large increase in university graduates leave the education premium unchanged?," IFS Working Papers W16/01, Institute for Fiscal Studies.
    4. Nie, Haifeng & Xing, Chunbing, 2019. "Education expansion, assortative marriage, and income inequality in China," China Economic Review, Elsevier, vol. 55(C), pages 37-51.
    5. David Card & Thomas Lemieux, 2001. "Can Falling Supply Explain the Rising Return to College for Younger Men? A Cohort-Based Analysis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 116(2), pages 705-746.
    6. Abigail Wozniak, 2010. "Are College Graduates More Responsive to Distant Labor Market Opportunities?," Journal of Human Resources, University of Wisconsin Press, vol. 45(4), pages 944-970.
    7. Li, Hongbin & Ma, Yueyuan & Meng, Lingsheng & Qiao, Xue & Shi, Xinzheng, 2017. "Skill complementarities and returns to higher education: Evidence from college enrollment expansion in China," China Economic Review, Elsevier, vol. 46(C), pages 10-26.
    8. Xin Meng, 2012. "Labor Market Outcomes and Reforms in China," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 75-102, Fall.
    9. Liang, Yinhe & Dong, Zhiyong, 2019. "Has education led to secularization? Based on the study of compulsory education law in China," China Economic Review, Elsevier, vol. 54(C), pages 324-336.
    10. Blundell, Richard, et al, 2000. "The Returns to Higher Education in Britain: Evidence from a British Cohort," Economic Journal, Royal Economic Society, vol. 110(461), pages 82-99, February.
    11. Knight, John & Deng, Quheng & Li, Shi, 2017. "China’s expansion of higher education: The labour market consequences of a supply shock," China Economic Review, Elsevier, vol. 43(C), pages 127-141.
    12. Sefa Awaworyi Churchill & Vinod Mishra, 2018. "Returns to education in China: a meta-analysis," Applied Economics, Taylor & Francis Journals, vol. 50(54), pages 5903-5919, November.
    13. Zhu, Min, 2014. "College admissions in China: A mechanism design perspective," China Economic Review, Elsevier, vol. 30(C), pages 618-631.
    14. Yi Che & Lei Zhang, 2018. "Human Capital, Technology Adoption and Firm Performance: Impacts of China's Higher Education Expansion in the Late 1990s," Economic Journal, Royal Economic Society, vol. 128(614), pages 2282-2320, September.
    15. 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.
    16. Kang, Lili & Peng, Fei & Zhu, Yu, 2018. "Returns to higher education subjects and tiers in China - Evidence from the China Family Panel Studies," GLO Discussion Paper Series 238, Global Labor Organization (GLO).
    17. Fengyan Dai & Fang Cai & Yu Zhu, 2022. "Returns to higher education in China – evidence from the 1999 higher education expansion using a fuzzy regression discontinuity," Applied Economics Letters, Taylor & Francis Journals, vol. 29(6), pages 489-494, March.
    18. Cui, Ying & Liu, Hong & Zhao, Liqiu, 2019. "Mother's education and child development: Evidence from the compulsory school reform in China," Journal of Comparative Economics, Elsevier, vol. 47(3), pages 669-692.
    19. George Psacharopoulos & Harry Anthony Patrinos, 2018. "Returns to investment in education: a decennial review of the global literature," Education Economics, Taylor & Francis Journals, vol. 26(5), pages 445-458, September.
    20. Colm Harmon & Hessel Oosterbeek & Ian Walker, 2003. "The Returns to Education: Microeconomics," Journal of Economic Surveys, Wiley Blackwell, vol. 17(2), pages 115-156, April.
    21. Min Zhu, 2014. "College admissions in China: A mechanism design perspective," Post-Print halshs-00871352, HAL.
    22. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66(4), pages 281-281.
    23. Hai Fang & Karen N. Eggleston & John A. Rizzo & Scott Rozelle & Richard J. Zeckhauser, 2012. "The Returns to Education in China: Evidence from the 1986 Compulsory Education Law," NBER Working Papers 18189, National Bureau of Economic Research, Inc.
    24. Xing, Chunbing & Yang, Peng & Li, Zhilong, 2018. "The medium-run effect of China's higher education expansion on the unemployment of college graduates," China Economic Review, Elsevier, vol. 51(C), pages 181-193.
    25. Zhao, Guochang & Ye, Jingjing & Li, Zhengyang & Xue, Sen, 2017. "How and why do Chinese urban students outperform their rural counterparts?," China Economic Review, Elsevier, vol. 45(C), pages 103-123.
    26. Wu, Jia & Wei, Xiangdong & Zhang, Hongliang & Zhou, Xiang, 2019. "Elite schools, magnet classes, and academic performances: Regression-discontinuity evidence from China," China Economic Review, Elsevier, vol. 55(C), pages 143-167.
    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. Wang, Haining & Cheng, Zhiming & Smyth, Russell & Sun, Gong & Li, Jie & Wang, Wangshuai, 2022. "University education, homeownership and housing wealth," China Economic Review, Elsevier, vol. 71(C).
    2. Li Dai & Pedro S. Martins, 2020. "Does vocational education pay off in China? Instrumental-variable quantile-regression evidence," Working Papers 100, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    3. Huang, Bin & Tani, Massimiliano & Zhu, Yu, 2021. "Does higher education make you more entrepreneurial? Causal evidence from China," Journal of Business Research, Elsevier, vol. 135(C), pages 543-558.
    4. Chen, Yuanyuan & Wang, Haining & Cheng, Zhiming & Smyth, Russell, 2023. "Education and Migrant Health in China," Economic Modelling, Elsevier, vol. 121(C).
    5. Piracha, Matloob & Tani, Massimiliano & Zimmermann, Klaus F. & Zhang, Yu, 2022. "Higher education expansion and the rise of China in economics research," China Economic Review, Elsevier, vol. 74(C).
    6. Peilin Li & Yufeng Wu & Hui Ouyang, 2022. "Effect of hukou Accessibility on Migrants’ Long Term Settlement Intention in Destination," Sustainability, MDPI, vol. 14(12), pages 1-17, June.

    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. Huang, Bin & Tani, Massimiliano & Wei, Yi & Zhu, Yu, 2022. "Returns to education in China: Evidence from the great higher education expansion," China Economic Review, Elsevier, vol. 74(C).
    2. Fengyan Dai & Fang Cai & Yu Zhu, 2022. "Returns to higher education in China – evidence from the 1999 higher education expansion using a fuzzy regression discontinuity," Applied Economics Letters, Taylor & Francis Journals, vol. 29(6), pages 489-494, March.
    3. Hu, Chenxu & Bollinger, Christopher, 2021. "Effects of cohort size on college premium: Evidence from China's higher education expansion," China Economic Review, Elsevier, vol. 70(C).
    4. Wang, Haining & Cheng, Zhiming & Smyth, Russell & Sun, Gong & Li, Jie & Wang, Wangshuai, 2022. "University education, homeownership and housing wealth," China Economic Review, Elsevier, vol. 71(C).
    5. Wang, Chuhong & Liu, Xingfei & Yan, Zizhong & Zhao, Yi, 2022. "Higher education expansion and crime: New evidence from China," China Economic Review, Elsevier, vol. 74(C).
    6. Feng, Shuaizhang & Xia, Xiaoyu, 2022. "Heterogeneous firm responses to increases in high-skilled workers: Evidence from China's college enrollment expansion," China Economic Review, Elsevier, vol. 73(C).
    7. Huang, Bin & Tani, Massimiliano & Zhu, Yu, 2021. "Does higher education make you more entrepreneurial? Causal evidence from China," Journal of Business Research, Elsevier, vol. 135(C), pages 543-558.
    8. Duan, Yide & Zhang, Haotian & Wang, Wenfu & Ao, Xiaoyan, 2022. "The effects of China's higher education expansion on urban and rural intergenerational mobility," China Economic Review, Elsevier, vol. 73(C).
    9. Chen, Yuanyuan & Wang, Haining & Cheng, Zhiming & Smyth, Russell, 2023. "Education and Migrant Health in China," Economic Modelling, Elsevier, vol. 121(C).
    10. Kong, Dongmin & Zhang, Bohui & Zhang, Jian, 2022. "Higher education and corporate innovation," Journal of Corporate Finance, Elsevier, vol. 72(C).
    11. Piracha, Matloob & Tani, Massimiliano & Zimmermann, Klaus F. & Zhang, Yu, 2022. "Higher education expansion and the rise of China in economics research," China Economic Review, Elsevier, vol. 74(C).
    12. Wei Si, 2022. "Higher education expansion and gender norms: evidence from China," Journal of Population Economics, Springer;European Society for Population Economics, vol. 35(4), pages 1821-1858, October.
    13. Feng, Yanxiang & Tan, Xinyang & Wang, Ruixin, 2022. "The value of higher education to entrepreneurial performance: Evidence from higher education expansion in China," China Economic Review, Elsevier, vol. 73(C).
    14. Qiao Wen, 2022. "Estimating Education and Labor Market Consequences of China’s Higher Education Expansion," Sustainability, MDPI, vol. 14(13), pages 1-25, June.
    15. Hao, Zedong & Wang, Yun, 2022. "Education signaling, effort investments, and the market's expectations: Theory and experiment on China's higher education expansion," China Economic Review, Elsevier, vol. 75(C).
    16. Dai, Fengyan & Xu, Lei & Zhu, Yu, 2022. "Higher education expansion and supply of teachers in China," China Economic Review, Elsevier, vol. 71(C).
    17. Kang, Lili & Peng, Fei & Zhu, Yu, 2018. "Returns to higher education subjects and tiers in China - Evidence from the China Family Panel Studies," GLO Discussion Paper Series 238, Global Labor Organization (GLO).
    18. Qiao Wen, 2022. "Trends in College–High School Wage Differentials in China: The Role of Cohort-Specific Labor Supply Shift," Sustainability, MDPI, vol. 14(24), pages 1-23, December.
    19. Dongshu Ou & Zhong Zhao, 2022. "Higher Education Expansion in China, 1999–2003: Impact on Graduate Employability," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(2), pages 117-141, March.
    20. Somani, Ravi, 2021. "The returns to higher education and public employment," World Development, Elsevier, vol. 144(C).

    More about this item

    Keywords

    2SLS; higher education expansion; returns to education; China;
    All these keywords.

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:iza:izadps:dp12954. See general information about how to correct material in RePEc.

    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: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.