Geographical Heterogeneous Returns to Education in China and its Determinants

Open Access
Bian, Meichen
Area of Honors:
Bachelor of Science
Document Type:
Thesis Supervisors:
  • Russell Wade Cooper, Thesis Supervisor
  • Russell Paul Chuderewicz, Honors Advisor
  • Heterogeneity
  • Return
  • Education
  • China
  • Determinants
In this thesis, I examine the education returns in selected areas of China by using data from the Chinese Household Finance Survey (CHFS) in 2001. I use Mincer’s human capital earnings equation to measure the education returns in selected provinces and cities. Facing the endogeneity of the earnings equation, I incorporate the instrumental variable (IV) method to correct the bias. However, we still confront heterogeneity of returns to education by looking at the empirical results.Comparing to western interior areas, eastern coastal line areas have higher returns to education. In order to understand this heterogeneity, I use human capital investment model based on Benabou’s work (1996) and the intergenerational persistence model based on Checchi’s work (2006) to examine the possible factors that contributing to the heterogeneity.