Reconciling the Returns to Rural Education

Abstract

Previous studies have found that the returns to education in rural China are far lower than\r\nestimates for market economies. In this paper, we try to determine why previous estimates are\r\nso low. Whereas estimates for the early 1990s average 2.3 percent, we find an average return\r\nof 6.4 percent. Furthermore, we find even higher returns among younger people, migrants,\r\nand for post-primary education. We further show that although part of the difference between\r\nour estimate and previous estimates can be attributed to increasing returns over time, a larger\r\nportion of the difference is due to the methodology used by other authors.