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The External Returns to Education: Evidence from Chinese Cities

Posted: 29 Aug 2006  

Zhiqiang Liu

SUNY at Buffalo, College of Arts & Sciences, Department of Economics

Abstract

Following Rauch's (1993) seminal study, there has been a growing interest among economists in estimating human capital externalities at the individual level. In this paper, we provide a first set of estimates of the external returns to education in Chinese cities. We find that the external returns are at least as high as the private returns to education. OLS estimates of the external returns range from a low of 4.9% to a high of 6.7%. Two-stage least squares estimates indicate that a one-year increase in city average education could increase individual earnings by between 11% and 13%. We also examine the impact of economic reforms on the external returns to education and find suggestive evidence that economic reforms have raised the external returns to education in Chinese cities.

Keywords: Human capital externalities, external returns to education, urban economy

JEL Classification: J24, J31, O15

Suggested Citation

Liu, Zhiqiang, The External Returns to Education: Evidence from Chinese Cities. Journal of Urban Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=927304

Zhiqiang Liu (Contact Author)

SUNY at Buffalo, College of Arts & Sciences, Department of Economics ( email )

Buffalo, NY 14260
United States

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