Returns to education in China: Evidence from the great higher education expansion

China experienced a near 5-fold increase in annual Higher Education (HE) enrolment the decade starting 1999. Using Household Finance Survey, we show that Great HE Expansion has exacerbated large pre-existing urban-rural gap educational attainment underpinned by hukou (household registration) system. We instrument years of schooling with interaction between urban status during childhood and timing expansion – essence difference-in-differences estimator using rural students to control for common time trends. find raised earnings 17% men 12% women respectively, allowing county fixed-effects. These Two Stage Least Squares (2SLS) estimates, which are robust additional controls at birth fully interacted province, can be interpreted as Local Average Treatment Effect (LATE) education on who enrolled only because Expansion. For selected subsample respondents parental information, 2SLS returns from more disadvantaged backgrounds least high their advantaged counterparts, both genders.