Home > Publications . Search All . Browse All . Country . Browse PSC Pubs . PSC Report Series

PSC In The News

RSS Feed icon

Ela and Budnick find higher unintended pregnancy risk among non-heterosexual women

Trends in frequent adolescent binge drinking, 1991-2015

Detroit Mayor challenges U-M to analyze root causes, patterns of murders in city

More News

Highlights

Bailey, Eisenberg , and Fomby promoted at PSC

Former PSC trainee Eric Chyn wins PAA's Dorothy S. Thomas Award for best paper

Celebrating departing PSC trainees

Bloome finds children raised outside stable 2-parent families more likely to become low-income adults, regardless of parents' income

More Highlights

Xiaogang Wu photo

Does the Market Pay Off? Earnings Inequality and Returns to Education in Urban China

Publication Abstract

Download PDF versionWu, Xiaogang, and Yu Xie. 2002. "Does the Market Pay Off? Earnings Inequality and Returns to Education in Urban China." PSC Research Report No. 02-500. 4 2002.

Previous work on the market transition debate has missed the direct link between individuals' labor market history and individuals' labor market outcome. In this paper, we develop a typology of workers based on their labor market histories. We propose a model of selective transition of workers from the state sector to the market sector as an alternative explanation for the increases in earnings inequality and in earnings returns to education in reform-era China. Analysis of data from an urban survey data in China reveals that commonly observed higher returns to education in the market sector are limited to recent market entrants. It also shows that the seemingly higher returns to education for recent market entrants result from the aggregation of two very different types of workers: those who were "pushed" and those who "jumped" into the market. Pooling these two subgroups would yield high rates of returns to education in the market sector. The results challenge the prevailing wisdom that education is necessarily more highly rewarded by the market sector. We conclude that higher returns to education in the market sector of a transition economy cannot be construed as caused by marketization per se, and that the sorting process of labor markets helps explain the sectoral differential.

Browse | Search : All Pubs | Next