China experienced a 47% expansion in higher education enrolment between 1998 and 1999 and a sixfold expansion in the decade to 2008. Using a fuzzy discontinuity in the months of births, we show that the 1999 expansion increased education by roughly 1 year around the cut-off point. Importantly, each additional year of university education induced by the expansion increases monthly earnings by 24%, whereas the corresponding OLS estimate is only 8%. Our findings are insensitive to alternative window widths, functional forms or the exclusion of the self-employed.
- Returns to higher education
- higher education expansion
- regression discontinuity design