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Access to Higher Education and Inequality: The Chinese Experiment

  • Belton Fleisher

    ()

    (Department of Economics, Ohio State University)

  • Xiaojun Wang

    ()

    (Department of Economics, University of Hawaii at Manoa)

  • Haizheng Li

    ()

    (School of Economics, Georgia Institute of Technology)

  • Shi Li

    ()

    (School of Economics and Business, Beijing Normal University)

We apply a semi-parametric latent variable model to estimate selection and sorting effects on the evolution of private returns to schooling for college graduates during China’s reform between 1988 and 2002. We find that there were substantial sorting gains under the traditional system, but they have decreased drastically and are negligible in the most recent data. We take this as evidence of growing influence of private financial constraints on decisions to attend college as tuition costs have risen and the relative importance of government subsidies has declined. The main policy implication of our results is that labor and education reform without concomitant capital market reform and government support for the financially disadvantaged exacerbates increases in inequality inherent in elimination of the traditional "wage-grid."

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File URL: http://www.econ.ohio-state.edu/pdf/fleisher/wp09-02.pdf
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Paper provided by Ohio State University, Department of Economics in its series Working Papers with number 09-02.

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Length: 42 pages
Date of creation: Feb 2009
Date of revision:
Handle: RePEc:osu:osuewp:09-02
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  12. Orley Ashenfelter & David J. Zimmerman, 1997. "Estimates Of The Returns To Schooling From Sibling Data: Fathers, Sons, And Brothers," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 1-9, February.
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  28. Hannum, Emily & Wang, Meiyan, 2006. "Geography and educational inequality in China," China Economic Review, Elsevier, vol. 17(3), pages 253-265.
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