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Skill complementarities and returns to higher education: Evidence from college enrollment expansion in China

Hongbin Li, Yueyuan Ma (), Lingsheng Meng, Xue Qiao () and Xinzheng Shi ()

China Economic Review, 2017, vol. 46, issue C, 10-26

Abstract: We find that the increased supply of college graduates resulting from college enrollment expansion in China increases college premiums for older cohorts and decreases college premiums for younger cohorts. This finding is inconsistent with the canonical model that assumes substitution among workers of different ages. We subsequently build a simple model that considers complementarities among workers of different ages and different skill levels. Our model predicts that the college premium of senior workers increases with the supply of young college graduates when skill is a scarce resource. The model's predictions are supported by empirical tests.

Keywords: Skill complementarity; College premium; College enrollment expansion (search for similar items in EconPapers)
JEL-codes: I23 I28 J24 J31 O53 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1016/j.chieco.2017.08.004

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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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