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Access to Higher Education and Inequality: The Chinese Experiment

43 Pages Posted: 28 Jun 2007  

Xiaojun Wang

University of Hawaii - Department of Economics

Belton M. Fleisher

Ohio State University (OSU) - Economics; IZA Institute of Labor Economics

Haizheng Li

Georgia Institute of Technology - School of Economics

Li Shi

Chinese Academy of Social Sciences (CASS) - Institute of Economics; IZA Institute of Labor Economics

Abstract

We apply a semi-parametric latent variable model to estimate selection and sorting effects on the evolution of private returns to schooling for college graduates during China's reform between 1988 and 2002. We find that there were substantial sorting gains under the traditional system, but they have decreased drastically and are negligible in the most recent data. We take this as evidence of growing influence of private financial constraints on decisions to attend college as tuition costs have risen and the relative importance of government subsidies has declined. The main policy implication of our results is that labor and education reform without concomitant capital market reform and government support for the financially disadvantaged exacerbates increases in inequality inherent in elimination of the traditional "wage-grid."

Keywords: return to schooling, selection bias, sorting gains, heterogeneity, financial constraints, comparative advantage, China

JEL Classification: J31, J24, O15

Suggested Citation

Wang, Xiaojun and Fleisher, Belton M. and Li, Haizheng and Shi, Li, Access to Higher Education and Inequality: The Chinese Experiment. IZA Discussion Paper No. 4030. Available at SSRN: https://ssrn.com/abstract=996402

Xiaojun Wang

University of Hawaii - Department of Economics ( email )

Honolulu, HI 96822
United States
808-956-7721 (Phone)
808-956-4347 (Fax)

Belton M. Fleisher (Contact Author)

Ohio State University (OSU) - Economics ( email )

410 Arps Hall
1945 N. High St.
Columbus, OH 43210-1172
United States
614-292-6429 (Phone)
614-292-3906 (Fax)

HOME PAGE: http://economics.sbs.ohio-state.edu/Fleisher/

IZA Institute of Labor Economics

Haizheng Li

Georgia Institute of Technology - School of Economics ( email )

217 Habersham
Atlanta, GA 30332
United States

Li Shi

Chinese Academy of Social Sciences (CASS) - Institute of Economics ( email )

2 Yuetan Beixiaojie
Beijing
+86 1 068032473 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

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