EconPapers    
Economics at your fingertips  
 

Does Education Pay in Urban China? Estimating Returns to Education Using Twins

Hongbin Li (), Pak Wai Liu, Ning Ma () and Junsen Zhang

Discussion Papers from Chinese University of Hong Kong, Department of Economics

Abstract: This paper empirically estimates the returns to education using twins data that the authors collected from urban China. Our ordinary least-squares estimate shows that one year of schooling increases an individual¡¦s earnings by 8.4 percent. However, once we use the within-twin-pair fixed effects model, the return is reduced to 2.7 percent, which suggests that much of the estimated returns to education in China that have been found in previous studies are due to omitted ability or the family effect. This finding suggests that well-educated people are faring well in China mainly because of their superior ability or family background advantages, rather than because of knowledge that they acquired at school. We further investigate why the true return is low and the omitted ability bias high, and find evidence that it may be a consequence of the distinct education system in China, which is highly selective and exam oriented. More specifically, we find that high school education mainly serves as a mechanism to select college students, and has zero returns in terms of earnings. In contrast, both vocational school education and college education have a large return that is comparable to that found in rich Western countries.

JEL-codes: J31 O15 P20 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-edu, nep-sea, nep-tra and nep-ure
Date: 2005-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14) Track citations by RSS feed

Downloads: (external link)
http://www.econ.cuhk.edu.hk/~discusspaper/00013.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:chk:cuhkdc:00013

Access Statistics for this paper

More papers in Discussion Papers from Chinese University of Hong Kong, Department of Economics
Bibliographic data for series maintained by ().

 
Page updated 2019-10-19
Handle: RePEc:chk:cuhkdc:00013