Munich Personal RePEc Archive

Does Schooling Pay? Evidence from China

La, Vincent (2014): Does Schooling Pay? Evidence from China.

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The effect of education on wages has been a widely explored topic. This paper will contribute to the existing literature by studying the causal effect of education on wages in China, a context which has been far less studied. China's compulsory education laws and minimum age labor laws provide potentially exogenous changes in educational attainment. The first goal of this paper will be to estimate the private return to education in China (the effect of an extra year of individual educational attainment on wages). Using China's compulsory education law as an instrument for individual educational attainment, we fail to find a statistically significant return on education in aggregate. However, using China's minimum age labor law as an instrument, we find that an increase in individual educational attainment by one year raises earnings by about 9%.

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