TY - JOUR
T1 - Returns to education in China
T2 - Evidence from the great higher education expansion
AU - Huang, Bin
AU - Tani, Massimiliano
AU - Wei, Yi
AU - Zhu, Yu
N1 - Funding Information:
We thank the Survey and Research Centre for China Household Finance at the Southwestern University of Finance and Economics (SWUFE) and the China Institute for Educational Finance Research (CIEFR) Peking University for data access. This work has been supported by the National Social Science Foundation of China in Education (Grant No.: BFA190054). Yu Zhu thanks the UNSW Rector-funded Visiting Fellowship for financial support. We are grateful to seminar participants at the Nanjing University of Finance and Economics of China, CIDE Mexico, University of Birmingham, Queen Mary University of London, the 2019 WPEG Meeting at Sheffield University, the EALE-SOLE-AASLE World Conference 2020 and particularly to Marco Ercolani, Pedro Martins, Alfonso Miranda and Peter Sinclair, for helpful comments. All errors are our own.
PY - 2022/8
Y1 - 2022/8
N2 - China experienced a near 5-fold increase in annual Higher Education (HE) enrolment in the decade starting in 1999. Using the China Household Finance Survey, we show that the Great HE Expansion has exacerbated a large pre-existing urban-rural gap in educational attainment underpinned by the hukou (household registration) system. We instrument the years of schooling with the interaction between urban hukou status during childhood and the timing of the expansion – in essence a difference-in-differences estimator using rural students to control for common time trends. We find that the Great HE raised earnings by 17% for men and 12% for women respectively, allowing for county fixed-effects. These Two Stage Least Squares (2SLS) estimates, which are robust to additional controls for hukou status at birth fully interacted with birth hukou province, can be interpreted as the Local Average Treatment Effect (LATE) of education on earnings for urban students who enrolled in HE only because of the Great HE Expansion. For the selected subsample of respondents with parental education information, we find that the 2SLS returns for students from more disadvantaged backgrounds are at least as high as their more advantaged counterparts, for both genders.
AB - China experienced a near 5-fold increase in annual Higher Education (HE) enrolment in the decade starting in 1999. Using the China Household Finance Survey, we show that the Great HE Expansion has exacerbated a large pre-existing urban-rural gap in educational attainment underpinned by the hukou (household registration) system. We instrument the years of schooling with the interaction between urban hukou status during childhood and the timing of the expansion – in essence a difference-in-differences estimator using rural students to control for common time trends. We find that the Great HE raised earnings by 17% for men and 12% for women respectively, allowing for county fixed-effects. These Two Stage Least Squares (2SLS) estimates, which are robust to additional controls for hukou status at birth fully interacted with birth hukou province, can be interpreted as the Local Average Treatment Effect (LATE) of education on earnings for urban students who enrolled in HE only because of the Great HE Expansion. For the selected subsample of respondents with parental education information, we find that the 2SLS returns for students from more disadvantaged backgrounds are at least as high as their more advantaged counterparts, for both genders.
KW - Returns to education
KW - 2SLS
KW - Higher education expansion
KW - China
UR - http://www.scopus.com/inward/record.url?scp=85130382405&partnerID=8YFLogxK
U2 - 10.1016/j.chieco.2022.101804
DO - 10.1016/j.chieco.2022.101804
M3 - Article
SN - 1043-951X
VL - 74
JO - China Economic Review
JF - China Economic Review
M1 - 101804
ER -