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Returns to military service in off-farm wage employment: Evidence from rural China

Benyufang Hou, Hong Liu () and Sophie Xuefei Wang

China Economic Review, 2020, vol. 59, issue C

Abstract: This paper studies the returns to military service in off-farm wage employment and the implications of military service on the rural-urban transition in rural China. We exploit government-induced variations in aggregate enrollment rates as our instrumental variable. Using data from the China Family Panel Studies, we find a substantial positive effect of military service on off-farm wage employment and earnings for men of rural origin, which is comparable in magnitude to the estimated returns to a college education in China. We also provide evidence that the earnings premium is likely to be explained by improved access to urban formal employment, political and human capital accumulation. However, in spite of the off-farm employment gain for all cohorts, we find that the positive earnings premium of military service is mainly concentrated among the pre-1970 cohort.

Keywords: Military service; Earnings; Off-farm employment; Instrumental variables; China (search for similar items in EconPapers)
JEL-codes: J31 J24 J43 N35 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.chieco.2019.101361

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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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