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Labor Market Experience and Returns to College Education in Fast-Growing Economies

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Listed:
  • Hongbin Li
  • James Liang
  • Binzhen Wu

Abstract

China’s college admissions increased fivefold between 1998 and 2009. While the college premium for young workers declined, that for senior workers increased in this period. In our general equilibrium model, a rising demand for skills (education and experience) explains both trends. A demand shock leads to an expansion in the elastic college enrollment, depressing the college premium for young workers. With an inelastic supply, experienced college graduates continue to enjoy a rising premium. Despite the low immediate premium, young individuals continue to flood into colleges because they foresee high lifetime returns. The lifetime college premium differs significantly from the cross-sectional premium estimated by the Mincer equation. Simulations match empirical results well.

Suggested Citation

  • Hongbin Li & James Liang & Binzhen Wu, 2025. "Labor Market Experience and Returns to College Education in Fast-Growing Economies," Journal of Human Resources, University of Wisconsin Press, vol. 60(1), pages 289-325.
    • Handle: RePEc:uwp:jhriss:v:60:y:2025:i:1:p:289-325
    Note: DOI: https://doi.org/10.3368/jhr.0421-11629R2
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    File URL: http://jhr.uwpress.org/cgi/reprint/60/1/289
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    More about this item

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I2 - Health, Education, and Welfare - - Education

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