Previous studies have found that the returns to education in rural China are far lower than estimates for other developing economies. In this paper, we seek to determine why previous estimates are so low and provide estimates of what we believe are more accurate measures of the returns. Whereas estimates for the early 1990s average 2.3 percent, we find an average return of 6.4 percent. Furthermore, we find even higher returns among younger people, migrants, and for post-primary education. The paper demonstrates that, although part of the difference between our estimate and previous estimates can be attributed to increasing returns during the 1990s, a larger part of the difference is due to the nature of the data and the methodological approaches used by other authors.

Testing the tradeoff between child quantity and quality within a family is complicated by the endogeneity of family size. Using data from the Chinese Population Census, this paper examines the effect of family size on child educational attainment in China. We find a negative correlation between family size and child educational attainment, even after we control for the birth order effect. We then instrument family size by the exogenous variation that is induced by a twin birth, and find a causal link between family size and children’s education. We also find that the effect of family size is more evident in rural China, where the public education system is poor. These findings suggest a quantity-quality tradeoff of children in developing countries.

In this paper, we examine the effect of maternal education on the health of young children by using a large sample of adopted children from China. As adopted children are genetically unrelated to the nurturing parents, the educational effect on them is most likely to be the nurturing effect. We find that the mother's education is an important determinant of the health of adopted children even after we control for income, the number of siblings, health environments, and other socioeconomic variables. Moreover, the effect of the mother's education on the adoptee sample is similar to that on the own birth sample, which suggests that the main effect of the mother's education on child health is in post-natal nurturing. Our work provides new evidence to the general literature that examines the determinants of health and that examines the intergenerational immobility of socioeconomic status.

In interpreting the positive relationship between spousal education and one’s earnings, economists have two major hypotheses: cross-productivity between couples and assortative mating. However, no prior empirical study has been able to separate the two effects. This paper empirically disentangles the two effects by using twins data that we collected from urban China. We have two major innovations: we use twins data to control for the unobserved mating effect in our estimations, and we estimate both current and wedding-time earnings equations. Arguably, the cross-productivity effect takes time to be realized and thus is relatively unimportant at the time of the wedding. Any effect of spousal education on wedding-time earnings should more likely be the mating effect. We find that both cross-productivity and mating are important in explaining the current earnings. Although the mating effect exists for both husbands and wives, the cross-productivity effect only runs from Chinese husbands to wives. We further show that the cross-productivity effect is realized by increasing the hourly wage rate rather than working hours.

This paper empirically estimates the returns to education using twins data that the authors collected from urban China. Our ordinary least-squares estimate shows that one year of schooling increases an individual’s earnings by 8.4 percent. However, once we use the within-twin-pair fixed effects model, the return is reduced to 2.7 percent, which suggests that much of the estimated returns to education in China that have been found in previous studies are due to omitted ability or the family effect. This finding suggests that well-educated people are faring well in China mainly because of their superior ability or family background advantages, rather than because of knowledge that they acquired at school. We further investigate why the true return is low and the omitted ability bias high, and find evidence that it may be a consequence of the distinct education system in China, which is highly selective and exam oriented. More specifically, we find that high school education mainly serves as a mechanism to select college students, and has zero returns in terms of earnings. In contrast, both vocational school education and college education have a large return that is comparable to that found in rich Western countries.

This paper examines the emergence of labour markets in China through the lens of returns to rural education. It demonstrates that methodology plays an important role in explaining the low estimates of returns in previous studies. When wages are defined on an hourly basis and sample selectivity is controlled, estimated rates of return rise. In addition, using data on households (n=1199) followed over 15 years (1988-2002), the paper shows that returns have risen over time. Finally, using households from the same community, it is shown that the returns rise even more when the sample includes workers with demographic and employment profiles more like those in the rest of the world (i.e., young and working in urban areas). In fact, the paper finds that the returns to education are close to 10% for young wage earners. When looked at in total, the results show that the returns to rural education in China are completely consistent with other developing countries. Finally, these results indicate that China's labour markets are becoming more functional over time.

Fundamental changes in China’s finance system for social services have decentralized responsibilities for provision to lower levels of government and increased costs to individuals. The more localized, market-oriented approaches to social service provision, together with rising economic inequalities, raise questions about access to social services among China’s children. With a multivariate analysis of three waves of the China Health and Nutrition Survey (1989, 1993 and 1997), this article investigates two dimensions of children’s social welfare: health care, operationalized as access to health insurance, and education, operationalized as enrolment in and progress through school. Three main results emerge. First, analyses do not suggest an across-the-board decline in access to these child welfare services during the period under consideration. Overall, insurance rates, enrolment rates and gradefor- age attainment improved. Secondly, while results underscore the considerable disadvantages in insurance and education experienced by poorer children in each wave of the survey, there is no evidence that household socio-economic disparities systematically widened. Finally, findings suggest that community resources conditioned the provision of social services, and that dimensions of community level of development and capacity to finance public welfare increasingly mattered for some social services.

This paper examines the determinants of child educational attainment. In addition to those examined in previous studies, it is found that maternal childcare is another important determinant of child educational attainment. The results are robust after controlling for endogeneity. The IV estimates show that once childcare time is controlled for, child health does not have an effect on school enrolment age. This finding suggests that omitting the childcare time may have biased the estimated effect of child health on school enrolment in previous studies.