The Returns to Education in China: An Analysis of Demographic and Degrees’ Heterogeneity

Research Article
Open access

The Returns to Education in China: An Analysis of Demographic and Degrees’ Heterogeneity

Xiaoyu Ge 1*
  • 1 Chinese University of Hong Kong (Shenzhen)    
  • *corresponding author xiaoyuge@link.cuhk.edu.cn
Published on 26 October 2023 | https://doi.org/10.54254/2753-7048/17/20231269
LNEP Vol.17
ISSN (Print): 2753-7056
ISSN (Online): 2753-7048
ISBN (Print): 978-1-83558-059-2
ISBN (Online): 978-1-83558-060-8

Abstract

Currently, education is pivotal for China’s future development in economy and technology. This study used the OLS estimation to evaluate the private return to education in China. The results show that an extra year of schooling will increase one’s yearly nominal income by around 6.95 percent. Moreover, the heterogeneous analysis indicates that the return rate is higher for male employees and workers who live in urban areas. This research supplements previous literature in two directions. First, it uses CFPS2020, which is relatively new data, to do the estimation. Second, interaction terms of years of schooling and the highest degree of education are created to figure out the various return to education of different degree holders. The regression results indicate that employees who have higher degrees of education will enjoy a higher return for one more year of schooling.

Keywords:

return to education, social inequality, chinese education, demographic heterogeneity

Ge,X. (2023). The Returns to Education in China: An Analysis of Demographic and Degrees’ Heterogeneity. Lecture Notes in Education Psychology and Public Media,17,326-335.
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References

[1]. Fu, W., & Larbi, F. O. (2022). The rebirth of the Chinese higher education: analysis of higher education policies from the economic reform to date. International Journal of Comparative Education and Development, 24(1), 1-19. DOI: https://doi.org/10.1108/IJCED-04-2021-0044

[2]. Abel, J. R., & Deitz, R. (2014). Do the benefits of college still outweigh the costs?. Current issues in economics and finance, 20(3). http://www.newyorkfed.org/research/current_issues

[3]. Guo, L., Huang, J., & Zhang, Y. (2019). Education development in China: Education return, quality, and equity. Sustainability, 11(13), 3750. DOI: https://doi.org/10.3390/su11133750

[4]. Yang, H. H., Zhu, S., & MacLeod, J. (2018). Promoting education equity in rural and underdeveloped areas: Cases on computer-supported collaborative teaching in China. Eurasia Journal of Mathematics, Science and Technology Education, 14(6), 2393-2405. DOI: https://doi.org/10.29333/ejmste/89841

[5]. Guo, D. (2018). Labour market impacts of school expenditure and class size: Evidence from China. The Journal of Development Studies, 54(7), 1137–1153. DOI: https://doi.org/10.1080/00220388.2017.1366451

[6]. Rouse, C. E. (2017). The economics of education and policy: Ideas for a principles course. The Journal of Economic Education, 48(3), 229-237. DOI: https://doi.org/10.1080/00220485.2017.1320611

[7]. Montenegro, C. E., & Patrinos, H. A. (2021). A data set of comparable estimates of the private rate of return to schooling in the world, 1970–2014. International Journal of Manpower. DOI: https://doi.org/10.1108/IJM-03-2021-0184

[8]. Churchill, S. A., & Mishra, V. (2018). Returns to education in China: a meta-analysis. Applied Economics, 50(54), 5903-5919. DOI: https://doi.org/10.1080/00036846.2018.1488074

[9]. Kang, L., & Peng, F. (2012). A selection analysis of returns to education in China. Post-Communist Economies, 24(4), 535-554. DOI: http://dx.doi.org/10.1080/14631377.2012.729307

[10]. Wang, W., Dong, Y., Luo, R., Bai, Y., & Zhang, L. (2019). Changes in returns to education for off-farm wage employment: evidence from rural China. China Agricultural Economic Review, 11(1), 2-19. DOI: https://doi.org/10.1108/CAER-05-2017-0098

[11]. Chen, Q., Xu, J., Zhao, J., & Zhang, B. (2017). Endogenous schooling, school proximity, and returns to rural schooling in Northwestern China. China Agricultural Economic Review, 9(2), 270-286. DOI: https://doi.org/10.1108/CAER-02-2016-0031

[12]. Becker, G. S. (1992). Human capital and the economy. Proceedings of the American philosophical society, 136(1), 85-92. https://www.jstor.org/stable/986801

[13]. Spence, M. (2002). Signaling in retrospect and the informational structure of markets. American economic review, 92(3), 434-459. DOI: https://doi.org/10.1257/00028280260136200

[14]. Woetzel, J., Seong, J., Leung, N., Ngai, J., Chen, L.-K., Tang, V., Agarwal, S. and Bo, W. (2021), Reskilling China: Transforming the world’s largest workforce into lifelong learners, McKinsey Global Institute.

[15]. Fang, B., Zhang, P., & Kim, S. (2021). National human resource development in China: government–industry–university relations and roles. European Journal of Training and Development. DOI: https://doi.org/10.1108/EJTD-07-2021-0110

[16]. Guo, D. (2018). Labour market impacts of school expenditure and class size: Evidence from China. The Journal of Development Studies, 54(7), 1137–1153. DOI: https://doi.org/10.1080/00220388.2017.1366451

[17]. Pfister, C., Simone, N., Sartore, C., & Geller, U. B. (2017). The relative importance of type of education and subject area: empirical evidence for educational decisions. Global Forum for Empirical Scholarship, 5(1), 30-58. DOI: https://doi.org/10.1108/EBHRM-05-2015-0019

[18]. Cooper, K., & Stewart, K. (2021). Does household income affect children’s outcomes? A systematic review of the evidence. Child Indicators Research, (14), 981-1005. DOI: https://doi.org/10.1007/s12187-020-09782-0

[19]. Guo, X., Lv, B., Zhou, H., Liu, C., Liu, J., Jiang, K., & Luo, L. (2018). Gender differences in how family income and parental education relate to reading achievement in China: the mediating role of parental expectation and parental involvement. Psychol, 2018(9), 1-12. DOI: https://doi.org/10.3389/fpsyg.2018.00783

[20]. Mincer, J. (1974). Schooling, Experience, and Earnings. Human Behavior & Social Institutions No. 2.

Cite this article

Ge,X. (2023). The Returns to Education in China: An Analysis of Demographic and Degrees’ Heterogeneity. Lecture Notes in Education Psychology and Public Media,17,326-335.

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The datasets used and/or analyzed during the current study will be available from the authors upon reasonable request.

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About volume

Volume title: Proceedings of the 4th International Conference on Educational Innovation and Philosophical Inquiries

ISBN：978-1-83558-059-2(Print) / 978-1-83558-060-8(Online)
Editor：Javier Cifuentes-Faura, Enrique Mallen
Conference website: https://www.iceipi.org/
Conference date: 7 August 2023
Series: Lecture Notes in Education Psychology and Public Media
Volume number: Vol.17
ISSN：2753-7048(Print) / 2753-7056(Online)

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References

[1]. Fu, W., & Larbi, F. O. (2022). The rebirth of the Chinese higher education: analysis of higher education policies from the economic reform to date. International Journal of Comparative Education and Development, 24(1), 1-19. DOI: https://doi.org/10.1108/IJCED-04-2021-0044

[2]. Abel, J. R., & Deitz, R. (2014). Do the benefits of college still outweigh the costs?. Current issues in economics and finance, 20(3). http://www.newyorkfed.org/research/current_issues

[3]. Guo, L., Huang, J., & Zhang, Y. (2019). Education development in China: Education return, quality, and equity. Sustainability, 11(13), 3750. DOI: https://doi.org/10.3390/su11133750

[4]. Yang, H. H., Zhu, S., & MacLeod, J. (2018). Promoting education equity in rural and underdeveloped areas: Cases on computer-supported collaborative teaching in China. Eurasia Journal of Mathematics, Science and Technology Education, 14(6), 2393-2405. DOI: https://doi.org/10.29333/ejmste/89841

[5]. Guo, D. (2018). Labour market impacts of school expenditure and class size: Evidence from China. The Journal of Development Studies, 54(7), 1137–1153. DOI: https://doi.org/10.1080/00220388.2017.1366451

[6]. Rouse, C. E. (2017). The economics of education and policy: Ideas for a principles course. The Journal of Economic Education, 48(3), 229-237. DOI: https://doi.org/10.1080/00220485.2017.1320611

[7]. Montenegro, C. E., & Patrinos, H. A. (2021). A data set of comparable estimates of the private rate of return to schooling in the world, 1970–2014. International Journal of Manpower. DOI: https://doi.org/10.1108/IJM-03-2021-0184

[8]. Churchill, S. A., & Mishra, V. (2018). Returns to education in China: a meta-analysis. Applied Economics, 50(54), 5903-5919. DOI: https://doi.org/10.1080/00036846.2018.1488074

[9]. Kang, L., & Peng, F. (2012). A selection analysis of returns to education in China. Post-Communist Economies, 24(4), 535-554. DOI: http://dx.doi.org/10.1080/14631377.2012.729307

[10]. Wang, W., Dong, Y., Luo, R., Bai, Y., & Zhang, L. (2019). Changes in returns to education for off-farm wage employment: evidence from rural China. China Agricultural Economic Review, 11(1), 2-19. DOI: https://doi.org/10.1108/CAER-05-2017-0098

[11]. Chen, Q., Xu, J., Zhao, J., & Zhang, B. (2017). Endogenous schooling, school proximity, and returns to rural schooling in Northwestern China. China Agricultural Economic Review, 9(2), 270-286. DOI: https://doi.org/10.1108/CAER-02-2016-0031

[12]. Becker, G. S. (1992). Human capital and the economy. Proceedings of the American philosophical society, 136(1), 85-92. https://www.jstor.org/stable/986801

[13]. Spence, M. (2002). Signaling in retrospect and the informational structure of markets. American economic review, 92(3), 434-459. DOI: https://doi.org/10.1257/00028280260136200

[14]. Woetzel, J., Seong, J., Leung, N., Ngai, J., Chen, L.-K., Tang, V., Agarwal, S. and Bo, W. (2021), Reskilling China: Transforming the world’s largest workforce into lifelong learners, McKinsey Global Institute.

[15]. Fang, B., Zhang, P., & Kim, S. (2021). National human resource development in China: government–industry–university relations and roles. European Journal of Training and Development. DOI: https://doi.org/10.1108/EJTD-07-2021-0110

[16]. Guo, D. (2018). Labour market impacts of school expenditure and class size: Evidence from China. The Journal of Development Studies, 54(7), 1137–1153. DOI: https://doi.org/10.1080/00220388.2017.1366451

[17]. Pfister, C., Simone, N., Sartore, C., & Geller, U. B. (2017). The relative importance of type of education and subject area: empirical evidence for educational decisions. Global Forum for Empirical Scholarship, 5(1), 30-58. DOI: https://doi.org/10.1108/EBHRM-05-2015-0019

[18]. Cooper, K., & Stewart, K. (2021). Does household income affect children’s outcomes? A systematic review of the evidence. Child Indicators Research, (14), 981-1005. DOI: https://doi.org/10.1007/s12187-020-09782-0

[19]. Guo, X., Lv, B., Zhou, H., Liu, C., Liu, J., Jiang, K., & Luo, L. (2018). Gender differences in how family income and parental education relate to reading achievement in China: the mediating role of parental expectation and parental involvement. Psychol, 2018(9), 1-12. DOI: https://doi.org/10.3389/fpsyg.2018.00783

[20]. Mincer, J. (1974). Schooling, Experience, and Earnings. Human Behavior & Social Institutions No. 2.

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