Kang, Lili and Peng, Fei (2011): A selection analysis on education returns in China.
Download (518kB) | Preview
This paper estimates the economic returns to education in China from 1989 to 2009, using the China Health and Nutrition Survey (CHNS) dataset. We find that education returns for one additional year generally increase from 2.6% in 1989 to 7.9% in 2009. Education returns, however, may reflect signals of innate ability, or the accumulation of human capital. Moreover, traditional Ordinary Least Square estimates may be biased by selection problems and mix-ups of age group heterogeneity. Hence, we estimate the marginal effects of schooling with the increasing labour markets experience, using the Heckman Selection Model. We find that the education returns for one additional year decline with labour markets experience, which support human capital hypothesis for all age groups except the group educated during the “Cultural Revolution”. Different dynamics of education returns in the four age groups are identified with large influence of institutional reforms in the labour markets, supporting the transition explanation of the evolution of education returns in China.
|Item Type:||MPRA Paper|
|Original Title:||A selection analysis on education returns in China|
|Keywords:||Education returns, China, Selection|
|Subjects:||J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J31 - Wage Level and Structure ; Wage Differentials
C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C52 - Model Evaluation, Validation, and Selection
P - Economic Systems > P2 - Socialist Systems and Transitional Economies > P23 - Factor and Product Markets ; Industry Studies ; Population
J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J24 - Human Capital ; Skills ; Occupational Choice ; Labor Productivity
|Depositing User:||Fei Peng|
|Date Deposited:||10 May 2012 01:49|
|Last Modified:||05 Mar 2017 06:19|
Appleton, S., Song, L. and Xia, Q., 2005. Has china crossed the river? The evolution of wage structure in urban china during reform and retrenchment. Journal of Comparative Economics, 33 (4), 644-663.
Becker, G.S., 1962. Investment in human capital: A theoretical analysis. The Journal of Political Economy, 70 (5, Part 2: Investment in Human Beings), 9-49.
Broaded, M., 1990. The lost and found generation: Cohort succession in chinese higher education. The Australian Journal of Chinese Affairs, 23, 77-95.
Brown, S. and Sessions, J.G., 1999. Education and employment status: A test of the strong screening hypothesis in italy. Economics of Education Review, 18, 397-404.
Byron, R.P. and Manaloto, E.Q., 1990. Returns to education in china. Economic Development and Cultural Change, 38 (4), 783-796.
Camposa, N.F. and Jolliffe, D., 2003. After, before and during: Returns to education in hungary. Economic Systems, 27, 377-390.
Card, D., 1999. The causal effect of education on earnings. Handbook of Labor Economics, Vol. 3A, Elsevier Science North-Holland, Amsterdam, New York and Oxford, 1801-1863.
Chevalier, A., Harmon, C., Walker, I. and Zhu, Y., 2004. Does education raise productivity, or just reflect it? The Economic Journal, 114 (499), F499-F517.
Dreher, A. and Gassebner, M., 2007. Greasing the wheels of entrepreneurship? The impact of regulations and corruption on firm entry. CESifo Working Paper No 2013.
Farber, H. and Gibbons, R., 1996. Learning and wage dynamics. The Quarterly Journal of Economics, 111, 1007-47.
Flabbi, L., Paternostro, S. and Tiongson, E., 2008. Returns to education in the economic transition: A systematic assessment using comparable data. Economics of Education Review, 27 (6), 724-740.
Fleisher, B., Sabirianova, K. and Wang, X., 2005. Returns to skills and the speed of reforms: Evidence from central and eastern europe, china, and russia. Journal of Comparative Economics, 33 (2), 351-370.
Fleisher, B. and Wang, X., 2005. Returns to schooling in china under planning and reform. Journal of Comparative Economics, 33 (2), 265-277.
Fleisher, B.M. and Wang, X., 2004. Skill differentials, return to schooling, and market segmentation in a transition economy: The case of mainland china. Journal of Development Economics, 73 (1), 315-328.
Friedrich, R.J., 1982. In defense of multiplicative terms in multiple regression equations. American Journal of Political Science, 26 (4), 797-833.
Heckman, J.J., 1974. Shadow prices, market wages, and labor supply. Econometrica, 42 (4), 679-694.
Heckman, J.J., 1976. The common structure of statistical models of truncation, sample selection and limited dependent variables and a simple estimator for such models. Annals of Economic and Social Measurement, 5, 475-492.
Heckman, J.J., 1979. Sample selection bias as a specification error. Econometrica, 47 (1), 153-161.
Heckman, J.J. and Honoré, B.E., 1990. The empirical content of the roy model. Econometrica, 58 (5), 1121-1149.
Katz, L.F. and Murph, K.M., 1992. Changes in relative wages, 1963-1987: Supply and demand factors. The Quarterly Journal of Economics, 107 (1), 35-78.
Li, H., 2003. Economic transition and returns to education in china. Economics of Education Review, 22 (3), 317-328.
Lin, J.Y., 1990. Collectivization and china's agricultural crisis in 1959-1961. The Journal of Political Economy, 98 (6), 1228-1252.
Liu, X., Park, A. and Zhao, Y., 2010. Explaining rising returns to education in urban china in the 1990s. IZA DP No. 4872.
Liu, Z., 1998. Earnings, education, and economic reforms in urban china. Economic Development and Cultural Change, 46 (4), 697-725.
Maurer-Fazio, M., 1999. Earnings and education in china's transition to a market economy survey evidence from 1989 and 1992. China Economic Review, 10 (1), 17-40.
Meng, X. and Kidd, M.P., 1997. Labor market reform and the changing structure of wage determination in china’s state sector during the 1980s. Journal of Comparative Economics, 25, 403-421.
Mincer, J., 1974. Schooling, experience and earnings. National Bureau of Economic Research, New York.
National Bureau of Statistics, D.O.C.S., 1999. Comprehensive statistical data and materials on 50 years of new china. Beijing: China Statistics Press.
O'mahony, M. and Stevens, P., 2009. Output and productivity growth in the education sector: Comparisons for the us and uk. Journal of Productivity Analysis, 31 (3), 177-194.
Peng, F. and Siebert, W.S., 2008. Real wage cyclicality in italy. LABOUR, 22 (4).
Potrafke, N., 2009. Did globalization restrict partisan politics? An empirical evaluation of social expenditures in a panel of ) oecd countries. Public Choice, 140, 105-124.
Psacharopoulos, G. and Patrinos, H.A., 2004. Returns to investment in education: A further update. Education Economics, 12 (2).
Qian, X. and Smyth, R., 2008. Private returns to investment in education: An empirical study of urban china. Post-Communist Economies, 20 (4), 483-501.
Qiu, T. and Hudson, J., 2010. Private returns to education in urban china. Economic Change and Restructuring, 43 (2), 131-150.
Riley, J., 1979. Testing the educational screening hypothesis. Journal of Political Economy, 87, s227-52.
Roy, A.D., 1951. Some thoughts on the distribution of earnings. Oxford Economic Papers, New Series, 3 (2), 135-146.
Schultz, T.W., 1961. Investment in human capital. American Economic Review, 51 (1), 1-17.
Solon, G., Barsky, R. and Parker, J.A., 1994. Measuring the cyclicality of real wages: How important is composition bias? NBER working paper.
Yang, D.T., Chen, V.W. and Monarch, R., 2010. Rising wages: Has china lost its global labor advantage? IZA DP No. 5008.
Zhang, J., Zhao, Y., Park, A. and Song, X., 2005. Economic returns to schooling in urban china, 1988 to 2001. Journal of Comparative Economics, 33 (4), 730-752.
Available Versions of this Item
- A selection analysis on education returns in China. (deposited 10 May 2012 01:49) [Currently Displayed]