Mingjia Xie, Who Benefits Most from Education? Evidence from China (Job Market Paper)

Abstract

I examine heterogeneous returns to post-compulsory education attainment (high school degree or above) in China by exploiting the variation in the educational attainment caused by a reform that introduces compulsory education with different implementation dates across provinces. Using data from China Household Finance Survey (CHFS), I find that individuals who are less likely to have post-compulsory education have higher returns to education. This finding contradicts the common conclusion on post-compulsory education that individuals select them into education based on gains. One explanation for this pattern is that children who are less likely to be enrolled in the education system have more disadvantaged backgrounds and lower wages without educational attainment. Education acts as an equalizer that leads to more homogeneous wages, resulting in larger returns for children who are less likely to be reached by post-compulsory education.