Compulsory Education Law and Return to Education in Urban China: Based on Regression Discontinuity Design
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| Title | Compulsory Education Law and Return to Education in Urban China: Based on Regression Discontinuity Design
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| Author | Liu Shenglong,Zhou Shaojie and Hu Angang |
| Organization | CASS;Tsinghua University |
| Email | liu_s_long11@163.com；zhoushaojie@mail.tsinghua.edu.cn；anganghu@mail.tsinghua.edu.cn |
| Key Words | Compulsory Education Law; return to education; regression discontinuity design; instrumental variable method |
| Abstract | Based on Compulsory Education Law enacted in 1986, this paper provides inference on the causality relationship between education and income in urban China. Through a regression discontinuity (RD) framework, this paper uses China Urban Household Survey (CUHS) data of 2007, 2008 and 2009 to estimate return to education in urban China. The empirical result indicates that return to education in urban China is 9.6%. The estimation of RD is evidently higher than that of OLS, which indicates there is a certain degree of underestimation in OLS. In addition, the empirical results also show that return to education of higher-income group is bigger that of lower-income group. On the one hand, this paper affirms the positive sense of Compulsory Education Law to promote Chinese education. It also indicates there is not so much difference between the return to education of China and that of the western countries. On the other hand, this paper indicates there is "Matthew Effect" in urban China as the return to education will widen the income gap between urban residents. |
| Serial Number | WP784 |
| Time | 2014-12-25 |
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