Access to Higher Education and Inequality: The Chinese Experiment

Belton M. Fleisher (), Xiaojun Wang (), Haizheng Li () and Shi Li ()
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Haizheng Li: School of Economics, Georgia Institute of Technology
Shi Li: School of Economics and Business, Beijing Normal University

No 09-02, Working Papers from Ohio State University, Department of Economics

Abstract: We apply a semi-parametric latent variable model to estimate selection and sorting effects on the evolution of private returns to schooling for college graduates during China’s reform between 1988 and 2002. We find that there were substantial sorting gains under the traditional system, but they have decreased drastically and are negligible in the most recent data. We take this as evidence of growing influence of private financial constraints on decisions to attend college as tuition costs have risen and the relative importance of government subsidies has declined. The main policy implication of our results is that labor and education reform without concomitant capital market reform and government support for the financially disadvantaged exacerbates increases in inequality inherent in elimination of the traditional "wage-grid."

Keywords: Return to schooling; selection bias; sorting gains; heterogeneity; financial constraints; comparative advantage; China (search for similar items in EconPapers)
JEL-codes: J31 J24 O15 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cna, nep-dev, nep-edu, nep-hrm, nep-lab and nep-tra
Date: 2009-02
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Related works:
Working Paper: Access to Higher Education and Inequality: The Chinese Experiment (2007)
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