Education return in urban China: evidences from CHNS dataset

Abstract

This essay investigate the returns to schooling in urban China using pooled CHNS (China Health and Nutrition Survey) dataset of the 1990s (including 1991, 1993 and 1997) and the 2000s (including 2000, 2004 and 2006). Based on the standard Mincerian human capital earning function, we adopt the OLS and IV models to see the difference of controlling endogeneity of schooling or not. Education is measured in two ways: years of schooling (input) and highest educational qualification (output, 5 categories of educational levels). We find that OLS estimate of the returns to schooling in the 2000s is higher than the 1990s. The returns to “college and above” and “professional school” increase across time, while the returns to “upper and lower middle school” decrease from 1990s to 2000s. In addition, if we do not control for endogeneity bias of schooling, the OLS estimates of the returns to schooling will be underestimated, especially in the 2000s.