The education treatment effect on the non-farm income of Chinese western rural labors

Abstract

Purpose– Education plays an important role in improving Chinese rural laborers’ non-farm incomes. However, in Chinese western rural area, the level of return to education is very low due to the underdeveloped economy and the condition of the education system. For improving the schooling returns level, Chinese central government is paying great attention to the condition of education in the rural western area. To date, no research has examined what educational style is more favorable for improving western rural laborers’ non-farm incomes. To answer this question, the purpose of this paper is to compare the treatment effect of high school education and secondary vocational education on their non-farm incomes. That will provide significant evidence for the government to carry out educational policy.Design/methodology/approach– Base on the Mincer model, several methods is used to estimate the average return to a year education on western rural labors’ non-farm income, including OLS, IV and Heckman tow-steps method, to accounting for the ability endogenous and self-selection bias. And the propensity score matching method is used in estimate the treatment effects of high school education and secondary vocational education.Findings– The results from Mincer model showed that the schooling returns in Chinese western rural area were estimated to range from 2.7 to 3.9 percent, that were lower than the average levels in Chinese whole rural area that are estimated in the other recent studies. By using propensity score matching to roll out the heterogeneous bias, show that the treatment effect from high school education was higher than that from secondary vocational education, indicating that the secondary vocational education is better.Originality/value– Studies concerning the causal relationship between schooling (high school education and secondary vocational education) and non-farm earnings in the western region of China remain very limited, even empty. This paper will make an update contribution to the literature in the area of education earnings in China.