Returns to education in China's urban labour market: evidence from matched employer-employee data for Shanghai

This chapter estimates the economic returns to schooling in urban China. To do so, we use a unique matched employer-employee data set from Shanghai collected by the Chinese Academy of Social Sciences in 2007. The ordinary least squares estimates suggest that the returns to an additional year of schooling are in the range 6.9-7.4 %. The inclusion of firm characteristics and ownership categories do not affect the coefficient on schooling, but the inclusion of industry categories reduce the coefficient on schooling by 0.5 %. Consistent with most of the extant literature, we also find that the returns to an additional year of schooling for females (8.5-9 %) are higher than the returns to an additional year of schooling for males (6.4-6.7 %).