Does Money Matter? Education Enrollment and Attainment in Rural China

Philippines Conference Room
Encina Hall, Third Floor, Central, C330
616 Jane Stanford Way, Stanford, CA 94305
  • Wei HA

In 2006, the Chinese Government introduced a massive block grant program for rural compulsory education, similar to that of Title I grant in the United States. Central government provided block grants with add-on requirement to provincial governments based on total number of pupils, average per pupil spending in that province, and a cost-sharing plan that favors the economically backward provinces. Provincial governments then distributed the grants along with its own share to county government using a similar formula to cover school operating expenditures, free tuitions, and conditional cash transfers for boarding students.


While there have been plenty research on whether the program has buttressed the financing of rural education or crowded out local financing, little is known about its effects on the enrollment and education attainment of rural children after a decade  (Shi, 2012; Chyi & Zhou, 2014; Lü, 2014). This paper fills this glaring gap by using matched household survey data and county school expenditure data between 2000-2011 that were made available to researchers for the first time.


Our identification strategies are composed of three parts. First, we take advantage of the exogenous variation in the rates of cost-sharing in the two-step allocation process of the block grants to estimate “Intention to Treatment” effects of the whole program. Secondly, we compare counties receiving different proportion of subsidies from central government in a difference-in-difference framework. Thirdly, we use the IV-DID strategy that instruments the county-level education spending with the exogenous variation in the planned allocation of the grants.


Dr. Wei HA is currently Research Professor in Education Policy and Leadership at the Graduate School of Education and a faculty associate at the Institute of Education Economics at Peking University. Prior to joining the Peking University, he worked as policy specialists at UNICEF and UNDP for seven years in the United States and Africa. During his doctoral study at the Harvard University, he also served as a consultant at the World Bank. He has conducted research in a wide-range of fields including education economics, public health, migration, and development economics. His current research focuses on the impact evaluation of key national education policies in China such as the Rural Compulsory Education Finance Reform, and China’s efforts to build “World Class Universities” through the 211 and 985 Projects. He also examines the interaction between education and major social transformations in China such as the massive labor retrenchments at State-Owned Enterprises in the late 1990s and rising housing prices in urban China. Dr. Ha received a dual BA in Economics and Political Science and MA in Education Economics from Peking University and his PhD in Public Policy from Harvard University.


This event is cosponsored by the Rural Education Action Program (REAP).

Does Money Matter? The Effects of Block Grants on Education Enrollment and Attainment in Rural China