Does the Market pay off? Earnings Returns to Education in Urban China

By Xiaogang Wu, Yu Xie. American Sociological Review, 2003

205 citations recorded by the source corpus.

Previous work on the market transition in reform-era China has missed the direct link between individuals’ labor market history and individuals’ labor market outcome. A typology of workers is developed based on individuals’ labor market histories, and a model of selective mobility of workers from the state sector to the market sector is offered as an explanation for higher earnings returns to education in the market sector. Analysis of data from an urban survey in China reveals that commonly observed higher earnings returns to education in the market sector are limited only to recent market entrants, and that early market entrants resemble state workers in both their level of earnings and returns to education. These results challenge the prevailing wisdom that education is necessarily more highly rewarded in the market sector. Thus it is concluded that higher returns to education in the market sector should not be construed as being caused by marketization per se, and instead that the sorting process of workers in labor markets helps explain the sectoral differentials.

Subfields: Economics and Econometrics, Political Science and International Relations, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/db6d38117d1af9bd6d9dd2e1d24165ae9561347b

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

1. Q. Ren
2. Qiang Fu
3. Xiaogang Wu

In Political Science and International Relations

1. You Zhang
2. Lijia Guo
3. Jiashun Huang
4. D. Treiman
5. Xiaogang Wu
6. Q. Ren
7. Qiang Fu
8. Florencia Torche

In Sociology and Political Science

1. You Zhang
2. Lijia Guo
3. Jiashun Huang
4. D. Treiman
5. Xiaogang Wu
6. Q. Ren
7. Qiang Fu
8. A. Sousa-Poza

Citations in the corpus

• The Returns to Education in China: Evidence from the 1986 Compulsory Education Law (2012, unknown): “Zhang et al. (2005) find returns to education increasing from 4 percent in 1988 to 10.”
• Education Development in China: Education Return, Quality, and Equity (2019, background): “Wu and Xie [49] Returns in the market sector and state sector Urban China An urban survey OLS”
• Educational Inequality under China's Rural–Urban Divide: The Hukou System and Return to Education (2010, background): “…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).”
• The household registration system and social stratification in China: 1955–1996 (2002, background): “To enhance the development of the urban service sector, the government allowed peasants to enter cities and establish small businesses, such as shoerepair shops, barbershops, and restaurants (Wu and Xie 2003).”