The Effect of Education and Wage Determination in China's Rural Industry
| Title: | The Effect of Education and Wage Determination in China's Rural Industry |
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| Format: | Chapter |
| Publication Date: | 2007 |
| Description: | Using recent rural household survey data, we investigate the effect of education on earnings in China's rural industry. OLS estimations present a very low return to schooling, i.e., 1-2% for women and insignificant for men, lower than that reported in other studies. In order to assess whether the OLS method causes biases in the estimated returns, we first investigate the possible attenuation bias caused by measurement error, and then correct the well-known omitted ability bias using various instrument variable estimations. Following the natural experiment approach, we identify a unique instrument attenuation bias, but the omitted ability bias appears to overestimate the rate of return. The instrumental variable estimations (2SLS and GMM) indicate that education has an insignificant effect on earnings. The institutional factors behind the rural wage structure and policy implications are discussed. |
| Ivan Allen College Contributors: | |
| Citation: | Li, Haizheng, and Aselia Urmanbetova. "The Effect of Education and Wage Determination in China's Rural Industry." In Private Enterprises and China's Economic Development, edited by Shuanglin Lin and Xiaodong Zhu, 235-254. London: Routledge, 2007. |
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