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.

The overall goal of this paper is to contribute to the ongoing assessment of China’s rural labor markets. To meet this goal, we have three specific objectives. First, we will provide an update of the trends in off-farm labor participation and wages of the sample households and examine how labor market outcomes have changed for those with different levels of education. Second, we will then seek to examine if education in different time periods – the late 1980s, the early 1990s and the mid 1990s -- can be associated with increasing access to off-farm jobs. Finally, we will examine how returns to education have changed during the course of the reform era. In short, our hypotheses are that if labor markets are increasingly rewarding those with a.) better education job access; b.) easier entry; and c.) higher wages, such outcomes will count as evidence that labor markets are improving. Both the descriptive data and the multivariate analysis robustly support the findings that between the late 1980s and the mid-1990s, labor markets have improved in the sense that rural workers have been increasingly rewarded for their education.