Off-Farm Employment Opportunities and Educational Attainment in Rural China

Introduction The objective of this chapter is to investigate the relationship between the growth of off-farm employment opportunities and educational attainment in rural China. Since the beginning of the reform era in the late-1970's off-farm employment has surged and education levels have risen dramatically. However, a persistent gap has formed between rural and urban areas, both in terms of income and educational achievement. Despite the existence of positive returns to education in the off-farm labor market (Yang, 1997; Johnson and Chow, 1997), rural children spend significantly less time in school than their urban counterparts. (Connelly and Zheng, 2003; Zheng, 2007) In a recent study de Brauw and Giles (2006) suggest that the increased incidence of rural-urban migration, which has accompanied the growth of off-farm employment, may be partly to blame for discouraging enrollment in upper middle school in rural areas. If this is true, then the growth of off-farm employment opportunities may actually harm long-term development prospects in rural areas by discouraging investment in human capital. The research reported here examines how a child's potential earnings and ability to participate in the off-farm labor market influence the household's willingness to allocate their children's time to education. Income and participation in each of three major sectors of the rural economy are modeled using data taken from the rural sample of the China Household Income Project (CHIP). We estimate the returns to education and the influence of these returns on the allocation of time to education by young household members. By performing this task, we gain insight into the relationship between employment opportunities and the likelihood of dropping out of school.