Economic returns to schooling for China's Korean minority

This paper examines economic returns to schooling for China s Korean minority in the urban labour market using ordinary least squares (OLS) and two-stage least squares. The OLS estimates of the returns to schooling are similar to findings from recent studies for the Chinese urban labour market. We use parents education and spouse s education to instrument for education as well as exploit heteroskedasticity to aid in identification. The two-stage least squares estimates using parents and spouse s education are considerably higher than the OLS estimates for returns to schooling, while the estimates which exploit heteroskedasticity for identification lie between the OLS and conventional two-stage least squares estimates. The economic returns to schooling reported in this study assist in explaining why private demand for education is strong among the ethnic Koreans in China. It also provides a justification for the Korean minority s focus on educational attainment.