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A selection analysis on education returns in China

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  • Kang, Lili
  • Peng, Fei

Abstract

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.

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  • Kang, Lili & Peng, Fei, 2011. "A selection analysis on education returns in China," MPRA Paper 38704, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:38704
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    3. Peng, Fei & Anwar, Sajid & Kang, Lili, 2022. "Number of siblings, access to treated water and returns to education in China," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 526-538.
    4. Kang, Lili & Peng, Fei, 2012. "Siblings, public facilities and education returns in China," MPRA Paper 38922, University Library of Munich, Germany.
    5. Sefa Awaworyi Churchill & Vinod Mishra, 2018. "Returns to education in China: a meta-analysis," Applied Economics, Taylor & Francis Journals, vol. 50(54), pages 5903-5919, November.
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    7. Lijia Guo & Jiashun Huang & You Zhang, 2019. "Education Development in China: Education Return, Quality, and Equity," Sustainability, MDPI, vol. 11(13), pages 1-20, July.

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    More about this item

    Keywords

    Education returns; China; Selection;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • C52 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Evaluation, Validation, and Selection
    • P23 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Factor and Product Markets; Industry Studies; Population
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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