Earnings and education in China's transition to a market economy Survey evidence from 1989 and 1992

Abstract

Analyses of returns to educational investments in China, based on 1981, 1985, and 1986 data, have yielded surprisingly low and sometimes negative rates. Given the extent of wage compression in prereform China, it is expected that human capital accumulation be increasingly recognized and rewarded as the Chinese economic reforms progress and market forces permeate the work place. Econometric analysis of newly available data, gathered in 1989 and 1992, reveals that returns to education for new labor force entrants, for workers who have recently obtained their current positions, for young people, for workers in recently established firms, and for collective, joint-venture, and private-sector workers are in the range expected of East Asian market economies with well-functioning labor markets.