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Returns to Education in China: 1 989-2011
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
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