How Does Education Affect the Earnings Distribution in Urban China?


  • The author thanks Beata Javorcik (the Editor), two anonymous referees, Karen Conway, Bruce Elmslie, Richard England, Belton Fleisher, Daniel Lothrop, Jorn-Steffen Pischke, Bei Qin, Chunbei Wang, Bob Woodward, Jeff Zax and seminar participants at the University of New Hampshire, SEA 2010, and AEA 2011 for their helpful comments.


It is widely believed that investing in education could be an effective strategy to promote higher standards of living and equity. We empirically assess this claim by estimating returns to education across the whole earnings distribution in urban China and find supporting evidence. In particular, we find that returns to education are more pronounced for individuals in the lower tail of the distribution than for those in the upper tail and that returns to education are uniformly larger for women than men. We also find that returns to education increased over time across the whole earnings distribution.