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Does the Market Pay Off? Earnings Inequality and Returns to Education in Urban China

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  • Xiaogang Wu

    ()

  • Yu Xie

    ()

Abstract

The paper examines earnings inequality and earnings returns to education in China among four types of workers characterized by their labor market history. Compared to workers staying in the state sector, early market entrants no longer enjoyed advantages. The commonly observed higher earnings returns to education in the market sector are only limited to recent market entrants. This results from the aggregation of two very different types of workers: those who were "pushed" and those who "jumped" into the market in later stage of the reform. The findings challenge the prevailing wisdom that education is necessarily more highly rewarded by the market sector.

Suggested Citation

  • Xiaogang Wu & Yu Xie, 2002. "Does the Market Pay Off? Earnings Inequality and Returns to Education in Urban China," William Davidson Institute Working Papers Series 454, William Davidson Institute at the University of Michigan.
  • Handle: RePEc:wdi:papers:2002-454
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    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/39838/3/wp454.pdf
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    References listed on IDEAS

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    1. Willis, Robert J & Rosen, Sherwin, 1979. "Education and Self-Selection," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 7-36, October.
    2. Hsiung, Bingyuang & Putterman, Louis, 1989. "Pre- and post-reform income distribution in a Chinese Commune: The case of dahe township in Hebei Province," Journal of Comparative Economics, Elsevier, vol. 13(3), pages 406-445, September.
    3. Cain, Glen G, 1976. "The Challenge of Segmented Labor Market Theories to Orthodox Theory: A Survey," Journal of Economic Literature, American Economic Association, vol. 14(4), pages 1215-1257, December.
    4. Byron, Rayond P & Manaloto, Evelyn Q, 1990. "Returns to Education in China," Economic Development and Cultural Change, University of Chicago Press, vol. 38(4), pages 783-796, July.
    5. Adelman, Irma & Sunding, David, 1987. "Economic policy and income distribution in China," Journal of Comparative Economics, Elsevier, vol. 11(3), pages 444-461, September.
    6. Yingyi Qian, 1999. "The Institutional Foundations of China's Market Transition," Working Papers 99011, Stanford University, Department of Economics.
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    Cited by:

    1. Fleisher, Belton M. & Sabirianova, Klara & Wang, Xiaojun, 2005. "Returns to skills and the speed of reforms: Evidence from Central and Eastern Europe, China, and Russia," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 351-370, June.

    More about this item

    Keywords

    Labor Market; Earnings; Education; China's Transition;

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