Estimating the External Returns to Education: Evidence from China

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Title: Estimating the External Returns to Education: Evidence from China
Authors: Fan, WenMa, Yuanyuan
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Date: Aug-2012
Online since: 2012-09-27T14:12:09Z
Abstract: Good understanding on the human capital externalities is important for both policy makers and social science researchers. Economists have speculated for at least a century that the social returns to education may exceed the private returns. In this paper, using the longitudinal data from China Health and Nutrition Survey (CHNS), we examine how individual wage changes associated with the share of college graduates in the same province across years for a person who has never moved by implementing individual fixed effects estimates. The individual fixed effect model shows that the external returns to education in China appear to be negative and on the order of -2%, which might be biased by potential endogeneity. Concerned with this problem, we then implement the IV fixed effect estimates and find positive external returns to education at about 10%. We also find this returns differ across individual heterogeneity.
Funding Details: Not applicable
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP12/20
Keywords: EducationExternalitiesSpilloverSignallingChina
Subject LCSH: Wages--College graduates--China
Wages--Effect of education on--China
Externalities (Economics)
Education--Social aspects--China
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Language: en
Status of Item: Not peer reviewed
Appears in Collections:Economics Working Papers & Policy Papers

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