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Sorting, Selection, and Transformation of the Return to College Education In China

  • Belton M. Fleisher

    ()

  • Haizheng Li
  • Shi Li
  • Xiaojun Wang

We estimate selection and sorting effects on the evolution of the private return to schooling for college graduates during China’s reform between 1988 and 2002. We pay special attention to the changing role of sorting by ability versus budget-constraint effects as China’s education policy has changed from one in which the bulk of direct costs are paid by government for students who pass a rigid set of test to one in which freedom of choice is increasingly the rule for those who can afford to pay for tuition and living expenses while acquiring higher education. We find evidence of substantial sorting gains under the traditional system but that gains have diminished and even become negative as schooling choices widened and participation has become subject to increasing direct private costs. We take this as evidence consistent with the influence of financial constraints on decisions to attend college.

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File URL: http://www.wdi.umich.edu/files/Publications/WorkingPapers/wp756.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 wp756.

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Length: pages
Date of creation: 01 Mar 2000
Date of revision:
Handle: RePEc:wdi:papers:2005-756
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  1. Orazem, Peter F & Vodopivec, Milan, 1995. "Winners and Losers in Transition: Returns to Education, Experience, and Gender in Slovenia," World Bank Economic Review, World Bank Group, vol. 9(2), pages 201-30, May.
  2. James Heckman & Hidehiko Ichimura & Jeffrey Smith & Petra Todd, 1998. "Characterizing Selection Bias Using Experimental Data," Econometrica, Econometric Society, vol. 66(5), pages 1017-1098, September.
  3. Yang, Dennis Tao, 2002. "What has caused regional inequality in China?," China Economic Review, Elsevier, vol. 13(4), pages 331-334, December.
  4. Carneiro, Pedro & Heckman, James J., 2002. "The Evidence on Credit Constraints in Post-Secondary Schooling," IZA Discussion Papers 518, Institute for the Study of Labor (IZA).
  5. Dennis Tao Yang, 1999. "Urban-Biased Policies and Rising Income Inequality in China," American Economic Review, American Economic Association, vol. 89(2), pages 306-310, May.
  6. Li, Haizheng, 2003. "Economic transition and returns to education in China," Economics of Education Review, Elsevier, vol. 22(3), pages 317-328, June.
  7. Daniel Münich & Jan Svejnar & Katherine Terrell, 2005. "Returns to Human Capital Under The Communist Wage Grid and During the Transition to a Market Economy," The Review of Economics and Statistics, MIT Press, vol. 87(1), pages 100-123, February.
  8. Fleisher, Belton M & Dong, Keyong & Liu, Yunhua, 1996. "Education, Enterprise Organization, and Productivity in the Chinese Paper Industry," Economic Development and Cultural Change, University of Chicago Press, vol. 44(3), pages 571-87, April.
  9. repec:cup:cbooks:9780521771269 is not listed on IDEAS
  10. Knight, John B & Song, Lina, 1991. "The Determinants of Urban Income Inequality in China," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(2), pages 123-54, May.
  11. Yang, Dennis Tao, 2005. "Determinants of schooling returns during transition: Evidence from Chinese cities," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 244-264, June.
  12. Meng, Xin & Gregory, R G, 2002. "The Impact of Interrupted Education on Subsequent Educational Attainment: A Cost of the Chinese Cultural Revolution," Economic Development and Cultural Change, University of Chicago Press, vol. 50(4), pages 935-59, July.
  13. Fleisher, Belton M. & Peter, Klara Sabirianova & Wang, Xiaojun, 2004. "Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia," IZA Discussion Papers 1182, Institute for the Study of Labor (IZA).
  14. Fleisher, Belton M. & Chen, Jian, 1997. "The Coast-Noncoast Income Gap, Productivity, and Regional Economic Policy in China," Journal of Comparative Economics, Elsevier, vol. 25(2), pages 220-236, October.
  15. Hannum, Emily & Wang, Meiyan, 2006. "Geography and educational inequality in China," China Economic Review, Elsevier, vol. 17(3), pages 253-265.
  16. repec:cup:cbooks:9780521121118 is not listed on IDEAS
  17. Belton M. Fleisher & Klara Sabirianova Peter & Xiaojun Wang, 2004. "Returns to Skills and the Speed of Reforms: Evidence from Central and Eastern Europe, China, and Russia," William Davidson Institute Working Papers Series 2004-703, William Davidson Institute at the University of Michigan.
  18. Fleisher, Belton M. & Wang, Xiaojun, 2001. "Efficiency Wages and Work Incentives in Urban and Rural China," Journal of Comparative Economics, Elsevier, vol. 29(4), pages 645-662, December.
  19. Bjorklund, Anders & Moffitt, Robert, 1987. "The Estimation of Wage Gains and Welfare Gains in Self-selection," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 42-49, February.
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