| Why Doesn't Education Pay in Urban China? [by Hongbin Li, Pak Wai Liu and Junsen Zhang] |
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| 发布时间: 10-02-04 阅读次数:193 新闻来源:清华大学中国财政税收研究所 |
Hongbin Li; Pak Wai Liu; Junsen Zhang
NIFS Working Paper No. 000009
Abstract:
This paper empirically estimates the return to education using twins data that the authors collected from urban China. Our ordinary least-squares estimate shows that one year of schooling increases an individual's earnings by 8.4 percent. If we use a within-twin xed e ects model, the return is reduced to 2.7 percent, but rises to 3.8 percent after the correction of measurement error. These results suggest that a large portion of the estimated returns to education in China that have been found in previous studies is due to omitted ability or the family e ect. This nding suggests that well-educated people are faring well in China mainly because of their superior ability or family background advantages, rather than because of knowledge that they acquired at school. We further investigate why the true return is low and the omitted ability bias high, and nd evidence that it may be a consequence of the distinct education system in China, which is highly selective and exam oriented. More speci cally, we nd that high school education mainly serves as a mechanism to select college students, and has zero returns in terms of earnings. In contrast, both vocational school education and college education have a large return that is comparable to that found in rich Western countries.
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