Endogenous schooling, school proximity and returns to rural schooling in Northwestern China
Qihui Chen (),
Jiaqi Zhao and
China Agricultural Economic Review, 2017, vol. 9, issue 2, 270-286
Purpose - The purpose of this paper is to estimate the returns to rural schooling in China, addressing both endogeneity in rural individuals’ schooling and self-selection into off-farm work. Design/methodology/approach - This paper exploits geographical proximity to rural secondary schools to create instrumental variables (IV) for individuals’ years of schooling. It addresses both endogenous schooling and self-selection using the two-step procedure developed in Wooldridge (2002, p. 586). Findings - The preferred IV estimate of schooling returns, 7.6 percent, is considerably higher than most previous estimates found in rural China. Originality/value - This paper is among the few papers that examine returns to rural schooling in China while simultaneously addressing both endogeneity in individuals’ schooling and self-selection into off-farm work. Its findings suggest that rural education in China is potentially able to generate a respectable level of economic returns if policies are designed to provide greater school accessibility to rural individuals.
Keywords: Rural China; Instrumental variables; School proximity; Schooling returns; C21; J24; J31; P25 (search for similar items in EconPapers)
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