Selection Bias, Comparative Advantage and Heterogeneous Returns to Education: Evidence from China in 2000
By James J. Heckman, Xuesong Li. Social Science Research Network, 2003
287 citations recorded by the source corpus.
This paper uses newly available Chinese micro data to estimate the return to college education for late 20th century China when allowing for heterogeneous returns among individuals selecting into schooling based on these differences. We use recently developed semiparametric methods to identify the parameters of interest. We demonstrate that heterogeneity among people in returns to schooling is substantial. People sort into schooling on the basis of the principle of comparative advantage, which we document to be an empirically important phenomenon in modern Chinese labor markets. Standard least squares or instrumental variable methods do not properly account for this sorting. Using new methods that do, we estimate the effect on earnings of sending a randomly selected person to college is a 43% increase in lifetime earnings (nearly 11% annually) in 2000 for young people in urban areas of six provinces of China. The effect of college on those who go is 13%. Our evidence, and simple least squares evidence, suggests that after 20-plus years of economic reform with market orientation, the return to education has increased substantially in China, compared to the returns measured in the 1980's and the early 1990's.
Subfields: Economics and Econometrics, Sociology and Political Science
View Paper: https://www.semanticscholar.org/paper/a98eefb8da8ec297de3216ed3e05f817fa88b6fd
How researchers see this paper
The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.
In Economics and Econometrics
Citations in the corpus
- Educational Inequality under China's Rural–Urban Divide: The Hukou System and Return to Education (2010, unknown): “…relationship between educational attainment and earnings, and find a rural ^ urban gap in return to educationönamely, earnings from people's human capital in rural areas are systematically lower than those in urban areas (Heckman and Li, 2004; Wu and Xie, 2003; Xie and Hannum, 1996; Zhou, 2000).”
- Education Inequality between Rural and Urban Areas of the People's Republic of China, Migrants’ Children Education, and Some Implications (2015, background): “For example, Heckman and Li (2003) show that the PRC spent about 2.5% of GDP on education in the 2000s, which was much lower than the amount spent by other developing countries in Asia (about 4%–5”
- China's higher education expansion and unemployment of college graduates (2014, unknown): “By the end of 1990s the return to college education has reached 30-50% (Heckman and Li, 2004, Zhang et al., 2005, Li and Ding, 2003, and Meng et al., 2010).”
- Estimating returns to education using twins in urban China (2012, unknown): “We agree that the return was low when the Chinese economy was under a planned regime and is likely to rise as the economy becomes more market-oriented (see, for example, Heckman and Li, 2004; Zhang et al., 2005), but argue that economic transition may not be the whole story.”