Economic Returns to Schooling in Urban China , 1988 - 19991

This study provides the first set of estimates on schooling returns over a long time span in urban China. There has been a dramatic and consistent increase in returns to education in urban China. In 1988, the rate of return to education was only 4.7%. By 1999, it has risen to 11.5%. Most of the rise in returns to education occurred after 1992 and reflected in the wage premium for college (or above) educated workers. The rise is consistently observed across gender, experience groups, regions, ownership forms, and is robust to adding other control variables. The authors acknowledge financial support from the Chinese University of Hong Kong (Direct Grant), Research Grant Council of Hong Kong (N_CUHK417/01), National Natural Science Foundation of China, and Visiting Research Fellowship awarded to Yaohui Zhao by the World Bank. Xiaoqing Song and Ching-yi Kung provided excellent research assistance. 1