China underwent a significant social and economic transformation starting from the 1980s. The transition to market oriented economy brought change to the market of human capital. Using Mincer-type equation, we analyzed the returns to education in China using the data from the Chinese Household Income Project Survey conducted in the years 1988, 1995 and 2002, which covers the most interesting period. Although the returns to education were found generally lower than world average, a significant and steady increase in the returns was observed. Actually, the returns to each schooling year were more than doubled in the fourteen years. This increase was shown to be robust under different conditions, with job categories, geographical effects taken into account. This confirms that the increase is not due to structural changes among different sectors or locations. Structure changes of the returns to education in the sense of education levels were also observed, with higher education levels increasingly rewarded
