Returns to Education in Rural and Urban China: An Empirical Study

Abstract

This paper focuses on the returns to education in China, and it aims to determine the returns rate difference between those in the rural and urban areas. Mincer’s model has been used as the base for the returns rate calculation. OLS has been chosen as the estimator for the regression analysis. The data set selected for analyzing was CHIP 2013, which is one of the latest national level education and income surveys conducted in China. The empirical analysis results showed that the rate of returns to education for the general samples was 13.9%. This, therefore, was higher than the rate (around 10%) in 2000-2010 in China. Meanwhile, the significant difference between rural (3.7%) and urban (25.6%) areas has been detected. The gender equality testing showed that in rural areas, the rate of returns to education for females (9.1%) was much higher than males (2.5%). The results provided an overview of the current situation regarding the educational investment in China. It also pointed out the income and educational inequality between rural-urban and male-female.