Explaining Rising Returns to Education in Urban China in the 1990s

Xuejun Liu (), Albert Park and Yaohui Zhao ()
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Xuejun Liu: Beijing Normal University
Yaohui Zhao: Peking University

No 4872, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Although theory predicts that international trade will decrease the relative demand for skilled workers in relatively skill-deficit countries, in recent decades many developing countries have experienced rising wage premiums for skilled workers. We examines this puzzle by quantifying the relative importance of different supply and demand factors in explaining the rapid increase in the returns to education experienced by China during the 1990s. Analyzing Chinese urban household survey and census data for six provinces, we find that although changes in the structure of demand did reduce the demand for skilled workers, consistent with trade theory, the magnitude of the effect was modest and more than offset by institutional reforms and technological changes that increased the relative demand for skill.

Keywords: education; earnings; inequality; China (search for similar items in EconPapers)
JEL-codes: F16 J24 J31 P23 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2010-04
New Economics Papers: this item is included in nep-cna, nep-dev and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Working Paper: Explaining Rising Returns to Education in Urban China in the 1990s (2010)
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