Increasing heterogeneity in the economic returns to higher education in urban China

Abstract

This study investigates individual heterogeneity in the economic returns to higher education in urban China following large-scale higher education expansion. We draw on data from the urban section of two waves of the Chinese General Social Survey, analyzing a sample of 1022 individuals in total who (1) were aged between 25 and 32; (2) completed high school education; and (3) were currently employed. Individual-level estimates of the distributions of the returns to higher education are obtained using a nonparametric kernel approach. While the average rate of returns to higher education increased for the 2003–2010 period, the extent of heterogeneity in these returns increased as well. Analysis of the heterogeneous returns to higher education across the distribution of income shows that the effects of college education are greatest at the upper end of the income distribution. Moreover, effect heterogeneity across the income distribution increased from 2003 to 2010.

Keywords:

• Heterogeneity
• Higher education
• Urban China

Acknowledgements

The authors are grateful for the constructive suggestions and comments from the reviewers and the editor of the Social Science Journal. This research was partly supported by the Junior Scholar Project of the Ministry of Education of the People's Republic of China “The Impacts of Educational Attainment on Health Status” (13YJC840014), the National Social Science Foundation Major Project funding “The mode and mechanism of trust in modern society” (11&ZD149), the Fudan University 985 Project Funding “Institutional change, transition in the structure of stratification, and social construction: Theoretical exploration and policy implications” (2011SHKXZD008).

Notes

1 One Shields Avenue, Davis, CA 95616, USA. Tel.: [phone]; fax: [phone].

2 The Gaussian kernel is one of many commonly used weighting kernels such as the boxcar kernel, the Epannechnikov kernel, and the tricube kernel (Wasserman, 2006).

3 It should be noted here that there is still no consensus regarding the most appropriate threshold value of gamma. However, social scientists most frequently set the threshold value of gamma to 2.

4 As pointed out by a reviewer, it is not appropriate to assume those cases in the survey 2003 all experienced higher education expansion because the mean of Mincer experience for year 2003 is 8.98. This suggests that most sampled cases in year 2003 entered college before higher education expansion.

5 The dependent variable in this analysis is the estimated individual-level returns to higher education and the independent variable is personal income.

6 See (author) for an examination of the social consequences of unequal returns to college education following higher education expansion in China.