Labor Market Experience and Returns to College Education in Fast-Growing Economies

Hongbin Li, James Liang and Binzhen Wu

Journal of Human Resources, 2025, vol. 60, issue 1, 289-325

Abstract: China’s college admissions increased fivefold between 1998 and 2009. While the college premium for young workers declined, that for senior workers increased in this period. In our general equilibrium model, a rising demand for skills (education and experience) explains both trends. A demand shock leads to an expansion in the elastic college enrollment, depressing the college premium for young workers. With an inelastic supply, experienced college graduates continue to enjoy a rising premium. Despite the low immediate premium, young individuals continue to flood into colleges because they foresee high lifetime returns. The lifetime college premium differs significantly from the cross-sectional premium estimated by the Mincer equation. Simulations match empirical results well.

JEL-codes: I2 J23 J24 J31 (search for similar items in EconPapers)
Date: 2025
Note: DOI: https://doi.org/10.3368/jhr.0421-11629R2
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Persistent link: https://EconPapers.repec.org/RePEc:uwp:jhriss:v:60:y:2025:i:1:p:289-325

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