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Does the Market Pay Off? Earnings Inequality and Returns to Education in Urban China

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  • Xiaogang Wu
  • Yu Xie

Abstract

The paper examines earnings inequality and earnings returns to education in China among four types of workers characterized by their labor market history. Compared to workers staying in the state sector, early market entrants no longer enjoyed advantages. The commonly observed higher earnings returns to education in the market sector are only limited to recent market entrants. This results from the aggregation of two very different types of workers: those who were "pushed" and those who "jumped" into the market in later stage of the reform. The findings challenge the prevailing wisdom that education is necessarily more highly rewarded by the market sector.

Suggested Citation

  • Xiaogang Wu & Yu Xie, 2002. "Does the Market Pay Off? Earnings Inequality and Returns to Education in Urban China," William Davidson Institute Working Papers Series 454, William Davidson Institute at the University of Michigan.
    • Handle: RePEc:wdi:papers:2002-454
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    File URL: http://deepblue.lib.umich.edu/bitstream/2027.42/39838/3/wp454.pdf
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    References listed on IDEAS

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    1. Willis, Robert J & Rosen, Sherwin, 1979. "Education and Self-Selection," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 7-36, October.
    2. Adelman, Irma & Sunding, David, 1987. "Economic policy and income distribution in China," Journal of Comparative Economics, Elsevier, vol. 11(3), pages 444-461, September.
    3. Hsiung, Bingyuang & Putterman, Louis, 1989. "Pre- and post-reform income distribution in a Chinese Commune: The case of dahe township in Hebei Province," Journal of Comparative Economics, Elsevier, vol. 13(3), pages 406-445, September.
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    5. John Knight & Song Lina, 1993. "Why Urban Wages Differ in China," Palgrave Macmillan Books, in: Keith Griffin & Zhao Renwei (ed.), The Distribution of Income in China, chapter 7, pages 216-284, Palgrave Macmillan.
    6. Byron, Rayond P & Manaloto, Evelyn Q, 1990. "Returns to Education in China," Economic Development and Cultural Change, University of Chicago Press, vol. 38(4), pages 783-796, July.
    7. Yingyi Qian, 1999. "The Institutional Foundations of China's Market Transition," Working Papers 99011, Stanford University, Department of Economics.
    8. Zhao Renwei, 1993. "Three Features of the Distribution of Income during the Transition to Reform," Palgrave Macmillan Books, in: Keith Griffin & Zhao Renwei (ed.), The Distribution of Income in China, chapter 2, pages 74-92, Palgrave Macmillan.
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    Cited by:

    1. Fleisher, Belton M. & Sabirianova, Klara & Wang, Xiaojun, 2005. "Returns to skills and the speed of reforms: Evidence from Central and Eastern Europe, China, and Russia," Journal of Comparative Economics, Elsevier, vol. 33(2), pages 351-370, June.
    2. Li, Bingqin & Sen, Gong, 2003. "Social inequalities and wage, housing and pension reforms in urban China," LSE Research Online Documents on Economics 21778, London School of Economics and Political Science, LSE Library.
    3. Saccone Donatella, 2008. "Educational Inequality and Educational Poverty. the Chinese Case in the Period 1975-2004," Department of Economics and Statistics Cognetti de Martiis. Working Papers 200808, University of Turin.
    4. Saccone Donatella, 2011. "Potenze economiche emergenti: Cina e India a confronto.Istruzione e diseguaglianze," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201113, University of Turin.

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    More about this item

    Keywords

    Labor Market; Earnings; Education; China's Transition;
    All these keywords.

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