Education and Earnings in Rural China

This is a study of education and earnings in rural China, based on data for 3709 residents from 23 counties in six provinces of central and southwestern regions in 1991. It found that education was singnificantly and positively related to earnings; an additional year of schooling raised the earnings of rural resindents by 4.8 yuan per month. The earnings effect on education was stronger for males than for females. The education and earnings relationship was also stronger in economic sectors with more market-oriented reform; and economic returns tended to be higher in economically more advanced provinces and regions. According to the Mincerian method, the average private rate of return to education was 4.8%. The Mincerian rates were similar for males and females, but were higher for ecnonmically more advanced provinces and regions. According to the elaborate method, the unadjusted private rate of return was 9.0% for promary educaion and 11.2%for lower-secondary education. Thus, investment in compulsory education in poor rural areas in China was quite profitable for the individual and could also be profitable from the perspective of society.