Estimating the External Returns to Education: Evidence from China

Wen Fan, Yuanyuan Ma () and Liming Wang ()
Additional contact information
Yuanyuan Ma: Zhongnan University of Economics and Law
Liming Wang: University College Dublin

No 9133, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using longitudinal data from the China Health and Nutrition Survey, we examine how individual wages change in line with the share of college graduates in a given province. The individual fixed effect model shows that the external returns to education in China appear to be zero. We estimate an instrumental variables fixed effects model where share of college graduates is instrumented by the number of universities with special status and find positive external returns to education of about 10 per cent to 14 per cent. We also find that the returns are affected by individual heterogeneity. While negligible returns are found for urban, women, and high-educated workers, the returns are positive and statistically significant for rural, men, and low-educated workers. This finding provides the motivation for increasing education investment in rural China and targeting it more toward poorly educated workers.

Keywords: externalities; public investment; education; China (search for similar items in EconPapers)
JEL-codes: J0 J24 O15 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2015-06
New Economics Papers: this item is included in nep-cna, nep-edu, nep-hrm, nep-lma and nep-tra
References: View references in EconPapers View complete reference list from CitEc
Citations:

Published - published in: Asian Economic Papers, 2015, 14 (3), 88-104

Downloads: (external link)
https://docs.iza.org/dp9133.pdf (application/pdf)

Related works:
Working Paper: Estimating the External Returns to Education: Evidence from China (2012)
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:iza:izadps:dp9133

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().