Labor Market Emergence and Returns to Education in Rural China

Scott Rozelle, Qiang Li, Linxiu Zhang and Alan deBrauw
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Qiang Li: Stanford University
Alan deBrauw: Stanford University
Authors registered in the RePEc Author Service: Alan de Brauw

REAP Papers from Rural Education Action Project at Stanford University

Abstract: This paper examines the emergence of labour markets in China through the lens of returns to rural education. It demonstrates that methodology plays an important role in explaining the low estimates of returns in previous studies. When wages are defined on an hourly basis and sample selectivity is controlled, estimated rates of return rise. In addition, using data on households (n=1199) followed over 15 years (1988-2002), the paper shows that returns have risen over time. Finally, using households from the same community, it is shown that the returns rise even more when the sample includes workers with demographic and employment profiles more like those in the rest of the world (i.e., young and working in urban areas). In fact, the paper finds that the returns to education are close to 10% for young wage earners. When looked at in total, the results show that the returns to rural education in China are completely consistent with other developing countries. Finally, these results indicate that China's labour markets are becoming more functional over time.

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Published in Review of Agricultural Economics

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Related works:
Journal Article: Labor Market Emergence and Returns to Education in Rural China (2005)
Journal Article: Labor Market Emergence and Returns to Education in Rural China * (2005)
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