Abstract
In determining whether a country's higher education system should be expanded, it is important for policymakers first to determine the extent to which high private returns to post-secondary education are an indication of the scarcity of graduates instead of the high unobserved ability of students who choose to attend post-secondary education. To this end, the paper identifies the returns to schooling in urban China using individual-level variation in educational attainment caused by exogenous city-wide disruptions to education during the Cultural Revolution from 1966 to 1976. For city-cohorts who experienced greater disruptions, children's educational attainment became less correlated with that of their fathers and more influenced by whether their fathers held administrative positions. The analysis calculates returns to college education using data from the China Urban Labor Survey conducted in five large cities in 2001. The results are consistent with the selection of high-ability students into higher education. The analysis also demonstrates that these results are unlikely to be driven by sample selection bias associated with migration, or by alternative pathways through which the Cultural Revolution could have affected adult productivity.
Highlights
One consequence of the ideological furor of China’s Great Proletarian CulturalRevolution, initiated by Chairman Mao Zedong in 1966 and lasting until after his death in 1976, was the widespread disruption of formal education in urban areas
An advantage of our approach is that, unlike prior studies based on cohort comparisons, we examine variation in shocks to individuals within city-cohorts associated with parental characteristics, which enables us to control for the many cohort differences within cities that are likely to be correlated both with productivity and the timing of the Cultural Revolution, e.g., school quality
Accounting for such effects would be important if our goal were to evaluate the welfare effects of the Cultural Revolution which is beyond the scope of this paper
Summary
Revolution, initiated by Chairman Mao Zedong in 1966 and lasting until after his death in 1976, was the widespread disruption of formal education in urban areas. A higher share of one’s cohort participating in the sent down youth program is associated with lower probability of completing high school when father’s have higher education (column 6) When both sets of interactions are included (column 7) the coefficients on the interactions are not independently significant, but they remain jointly significant at the 90 percent confidence level. To the extent that parental traits did influence early employment opportunities more for city-cohorts subject to greater educational shocks, and that these influences had a long-term effect on future career paths and realized wages, this should lead to upward bias in our estimates of the returns to schooling assuming that the direction of effects on early employment outcomes were the same as those on schooling. Such bias cannot explain the downward bias in the OLS returns to college education or the different directions of bias in the OLS returns to college and high school education
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