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Higher Education Expansion, the Hukou System, and Returns to Education in China

Author

Listed:
  • Huang, Bin

    (Nanjing University of Finance and Economics)

  • Zhu, Yu

    (University of Dundee)

Abstract
China experienced a near 5-fold increase in annual Higher Education (HE) enrolment in the decade starting in 1999. Using the China Household Finance Survey, we show that the expansion has exacerbated the large pre-existing urban-rural gap in educational attainment underpinned by the hukou (household registration) system. We then instrument years of schooling using the interaction of childhood urban hukou status and the timing of the expansion, which is analogous to a Difference-in-Differences estimator which uses rural students to control for any common time trend. The 2SLS estimates of 17% and 12% for men and women respectively are substantially larger than their OLS counterparts of 5% and 6%, both allowing for county fixed-effects. Our 2SLS results can be interpreted as a Local Average Treatment Effect (LATE), i.e. the average treatment effect of HE attendance on earnings for urban students who enrolled in HE as a result of the higher education expansion.

Suggested Citation

  • Huang, Bin & Zhu, Yu, 2020. "Higher Education Expansion, the Hukou System, and Returns to Education in China," IZA Discussion Papers 12954, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp12954
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    References listed on IDEAS

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    Cited by:

    1. Huang, Bin & Tani, Massimiliano & Zhu, Yu, 2021. "Does higher education make you more entrepreneurial? Causal evidence from China," Journal of Business Research, Elsevier, vol. 135(C), pages 543-558.
    2. Chen, Yuanyuan & Wang, Haining & Cheng, Zhiming & Smyth, Russell, 2023. "Education and Migrant Health in China," Economic Modelling, Elsevier, vol. 121(C).
    3. Piracha, Matloob & Tani, Massimiliano & Zimmermann, Klaus F. & Zhang, Yu, 2022. "Higher education expansion and the rise of China in economics research," China Economic Review, Elsevier, vol. 74(C).
    4. Dai, Li & Martins, Pedro S., 2020. "Does vocational education pay off in China? Instrumental-variable quantile-regression evidence," GLO Discussion Paper Series 495, Global Labor Organization (GLO).
    5. Zhang, Kexin, 2023. "The long-term impact of higher education: Evidence from the Gaokao reinstatement in China," Economics of Education Review, Elsevier, vol. 97(C).
    6. Peilin Li & Yufeng Wu & Hui Ouyang, 2022. "Effect of hukou Accessibility on Migrants’ Long Term Settlement Intention in Destination," Sustainability, MDPI, vol. 14(12), pages 1-17, June.
    7. Wang, Haining & Cheng, Zhiming & Smyth, Russell & Sun, Gong & Li, Jie & Wang, Wangshuai, 2022. "University education, homeownership and housing wealth," China Economic Review, Elsevier, vol. 71(C).
    8. Dai, Li & Martins, Pedro S., 2024. "Does vocational education pay off in China? Evidence from city-level education supply shocks," Economic Modelling, Elsevier, vol. 140(C).

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    More about this item

    Keywords

    2SLS; higher education expansion; returns to education; China;
    All these keywords.

    JEL classification:

    • I26 - Health, Education, and Welfare - - Education - - - Returns to Education
    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions

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