Dynamics of returns to vocational education in China: 2010–2017

Abstract

In this paper, we use the Chinese General Social Survey data (2010–2017) to analyze the dynamics of returns to different education qualifications. We find increasing returns for all types of education, with returns to vocational and academic education increasing roughly at the same speed. We additionally compare the returns to vocational education with returns to academic education. Compared to those who only complete compulsory education, upper secondary graduates earn about 20% more, vocational college graduates earn 50%, and academic university graduates earn 75% more. At tertiary level, academic education pays better than vocational education, although the difference shrinks over the years. At upper secondary level, the evidence is indeterminate, depending on different econometric techniques (i.e., OLS, IV, Lewbel method, or PSM). These findings add to the limited quantitative evidence on returns to vocational education. The dynamics emerged from the findings echo the discussion on labor market mismatch and overeducation in China, which has important policy implications.