Returns to schooling for urban and migrant workers in China: a detailed investigation

Christos Sakellariou and Zheng Fang

Applied Economics, 2016, vol. 48, issue 8, 684-700

Abstract: We use a new data set, the 2009 Rural Urban Migration in China (RUMiC) to estimate returns to schooling in China using instrumental variable (IV) estimation. After identifying a set of instruments, we conduct comprehensive validity and relevance testing of different combinations of instruments as well as robustness analysis of our estimates for rural-to-urban migrants and urban residents in China. We find that our point estimates are in the 6-9% range for urban workers compared to 7-8% for migrant workers. Returns for men (at 8-9%) are slightly higher than for women (at 6-7%). Thus, private returns to education in urban China in 2009 were not as high as other transition and developing countries, but substantial and have increased over time. Comparing OLS and IV estimates, we also find that the attenuation bias due to measurement error is generally large and more important in the migrant sample compared to the urban sample.

Date: 2016
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DOI: 10.1080/00036846.2015.1085642

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