Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/58650 
Authors: 
Year of Publication: 
2011
Series/Report no.: 
IZA Discussion Papers No. 6173
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
China's phenomenal growth is accompanied by both relatively low level of standards of living and high inequality. It is widely believe that investing in education could be an effective strategy to promote higher standards of living as well as to reduce inequality. However, little is known about whether this belief is empirically supported. To this end, we employ a recently developed distributional approach to estimate returns to education across the whole earnings distribution in urban China during economic transition. We find that returns to education are generally more pronounced for individuals in the lower tail of the earnings distribution than for those in the upper tail, in stark contrast to the results found in developed countries. Our result implies that education indeed reduces earnings inequality while increasing individuals' earnings. We also find that the returns to education are uniformly larger for women than for men across the distribution. The results suggest the presence of added effects of education on earnings, as opposed to productivity-enhancing effects, for disadvantaged groups. Finally, we find that rates of educational return increased over time for all parts of the earnings distribution.
Subjects: 
returns to education
inequality
gender gap
economic transition
instrumental variable quantile regression
JEL: 
J24
J61
J31
J7
J15
C31
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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