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Access to Higher Education and Inequality: The Chinese Experiment

Author

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  • 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)

Abstract

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."

Suggested Citation

  • Belton Fleisher & Xiaojun Wang & Haizheng Li & Shi Li, 2009. "Access to Higher Education and Inequality: The Chinese Experiment," Working Papers 09-02, Ohio State University, Department of Economics.
  • Handle: RePEc:osu:osuewp:09-02
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    File URL: http://www.econ.ohio-state.edu/pdf/fleisher/wp09-02.pdf
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    References listed on IDEAS

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    Cited by:

    1. Pedro Carneiro & Michael Lokshin & Nithin Umapathi, 2017. "Average and Marginal Returns to Upper Secondary Schooling in Indonesia," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 32(1), pages 16-36, January.
    2. Kyui, Natalia, 2016. "Expansion of higher education, employment and wages: Evidence from the Russian Transition," Labour Economics, Elsevier, vol. 39(C), pages 68-87.
    3. Yu, Nannan & Yu, Bo & de Jong, Martin & Storm, Servaas, 2015. "Does inequality in educational attainment matter for China's economic growth?," International Journal of Educational Development, Elsevier, vol. 41(C), pages 164-173.
    4. David Mayston & Juan Yang, 2012. "Education, Risk and Efficiency in Human Capital Investment," Discussion Papers 12/15, Department of Economics, University of York.
    5. Kleiman-Weiner, Max & Luo, Renfu & Zhang, Linxiu & Shi, Yaojiang & Medina, Alexis & Rozelle, Scott, 2013. "Eggs versus chewable vitamins: Which intervention can increase nutrition and test scores in rural China?," China Economic Review, Elsevier, vol. 24(C), pages 165-176.
    6. Cui, Yuling & Nahm, Daehoon & Tani, Massimiliano, 2013. "Earnings Differentials and Returns to Education in China, 1995-2008," IZA Discussion Papers 7349, Institute for the Study of Labor (IZA).
    7. 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.
    8. Heckman, James J. & Yi, Junjian, 2012. "Human Capital, Economic Growth, and Inequality in China," IZA Discussion Papers 6550, Institute for the Study of Labor (IZA).
    9. Wang, Le, 2013. "Estimating returns to education when the IV sample is selective," Labour Economics, Elsevier, vol. 21(C), pages 74-85.
    10. Wang, Le, 2012. "Economic transition and college premium in urban China," China Economic Review, Elsevier, vol. 23(2), pages 238-252.
    11. Radchenko, Natalia, 2014. "Heterogeneity in Informal Salaried Employment: Evidence from the Egyptian Labor Market Survey," World Development, Elsevier, vol. 62(C), pages 169-188.
    12. Liu, Qian, 2012. "Unemployment and labor force participation in urban China," China Economic Review, Elsevier, vol. 23(1), pages 18-33.
    13. Kang, Lili & Peng, Fei, 2013. "Economic Reform and Productivity Convergence in China," MPRA Paper 50810, University Library of Munich, Germany.
    14. Haizheng Li, 2010. "Higher Education in China: Complement or Competition to US Universities?," NBER Chapters,in: American Universities in a Global Market, pages 269-304 National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Return to schooling; selection bias; sorting gains; heterogeneity; financial constraints; comparative advantage; China;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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