Returns to Education in China: 1 989-2011

5月 19, 2017

Yang Huixinand Wang Haibing

School of Management, Shandong University, Jinan, China

School of Economics, Fudan University, Shanghai, China; Post-Doctor Research Station,

Shanghai Stock Exchange, Shanghai, China

Abstract: Using China Health and Nutrition Survey (CHNS) data between 1989

and 2011, this paper measures the returns to education in China based on the Mincer

earnings function and reaches the following ﬁndings through an analysis of the tendency of

continuous variations over a long timeframe: returns to education are on the rise within the

range of samples both under relative and absolute scenarios; returns to different levels of

education are characterized by increasing marginal return; no signiﬁcant difference exists

between the returns to junior middle school and the returns to primary school education.

Further discussions consider that the requirements of job positions for the overall

competence of personnel, differentiated decline of corporate demand for recruitment, lack

of an evaluation system in the labor market, information asymmetry in the job market, the

development strategy adopted in a particular stage of history and the current slow progress

of economic transition have jointly led to the underemployment of college graduates and the

great enthusiasm of parents investing in higher education for their children. Conclusions

of this paper not only have important practical relevance to the ongoing implementation of

China’s innovation-driven development strategy, but offer inspirations for the new round of

educational reform as well.

Keywords: returns to education, Mincer earnings function, time trend, educational reform

JEL Classiﬁcation: I21, J24, C21