Working Paper: NBER ID: w31367
Authors: Eric A. Hanushek; Yuan Wang; Lei Zhang
Abstract: The dramatic expansion of the education system and the transformation of the economy in China provide an opportunity to investigate how the labor market rewards skills. Between 2007 and 2018, the overall return to cognitive skills is virtually constant at 10%, whereas the college premium drops steeply by more than 20 percentage points. But, the regional differences in returns are significant and highlight the importance of differential demand factors. College returns are higher in more developed regions, but the declining trend is more pronounced. Returns to cognitive skills increase in more developed regions and decrease in less developed regions.
Keywords: Skill premiums; Cognitive skills; Higher education; Labor market; China
JEL Codes: I26; J01; O10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| educational attainment (I21) | labor market returns (J49) |
| supply of college-educated workers (J24) | college premium (I23) |
| economic transformation (P27) | wage trends (J31) |
| regional disparities (R11) | returns to cognitive skills (I26) |
| age (J14) | return to college degree (I26) |