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

  • Xiaogang Wu

    ()

  • Yu Xie

    ()

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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.

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File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp454.pdf
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Paper provided by William Davidson Institute at the University of Michigan in its series William Davidson Institute Working Papers Series with number 454.

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Length: 53 pages
Date of creation: 01 Apr 2002
Date of revision:
Handle: RePEc:wdi:papers:2002-454
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  1. Adelman, Irma & Sunding, David, 1987. "Economic policy and income distribution in China," Journal of Comparative Economics, Elsevier, vol. 11(3), pages 444-461, September.
  2. 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 1215-57, December.
  3. 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 783-96, July.
  4. Robert J. Willis & Sherwin Rosen, 1978. "Education and Self-Selection," NBER Working Papers 0249, National Bureau of Economic Research, Inc.
  5. 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.
  6. Yingyi Qian, 1999. "The Institutional Foundations of China's Market Transition," Working Papers 99011, Stanford University, Department of Economics.
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