Endogenous schooling, school proximity and returns to rural schooling in Northwestern China

Abstract

Purpose The purpose of this paper is to estimate the returns to rural schooling in China, addressing both endogeneity in rural individuals’ schooling and self-selection into off-farm work. Design/methodology/approach This paper exploits geographical proximity to rural secondary schools to create instrumental variables (IV) for individuals’ years of schooling. It addresses both endogenous schooling and self-selection using the two-step procedure developed in Wooldridge (2002, p. 586). Findings The preferred IV estimate of schooling returns, 7.6 percent, is considerably higher than most previous estimates found in rural China. Originality/value This paper is among the few papers that examine returns to rural schooling in China while simultaneously addressing both endogeneity in individuals’ schooling and self-selection into off-farm work. Its findings suggest that rural education in China is potentially able to generate a respectable level of economic returns if policies are designed to provide greater school accessibility to rural individuals.

Eating More but Not Better at School? Impacts of Boarding on Students’ Dietary Structure and Nutritional Status in Rural Northwestern China

“…Note that while geographic proximity has been widely exploited to construct instrument variables for schooling-related variables [45][46][47][48], there are three potential problems with this instrument variable in the context of rural China. First, it is possible that a long distance to school induces students to self-select into pure boarding schools, in which case distance to school may pick up influences of unobserved school characteristics, such as, say, the quality of food supplied at school.…”

Return to Schooling for Public and Private Sector Higher Education Institutions of Khyber Pakhtunkhwa-Pakistan

“…Finding of the current study endorsed and confirmed results of the studies conducted by Abbas and Foreman-Peck (2008) and Aslam (2007). Result of the study for return to schooling are more than estimated by Chen et al, (2017), who reported 7.6% as return for Rural China.…”

“…The study used OLS, IV and household fixed-effect and reported estimated economic rate of return about 5%. Chen et al, (2017) addressed schooling endogeneity and off-farm work self-selection to estimate the returns to rural schooling using geographical proximity as an instrumental variables (IV) for individuals' years of schooling in China. The study used two-step procedure (2SLS) and found 7.6% estimated schooling return.…”

“…Likewise, majority of studies reported positive and significant estimated return This Journal is licensed under a Creative Commons Attribution 4.0 International License to schooling for Pakistan. But most of them used traditional Mincerian earning function (OLS) without considering the bias occur due to endogeneity of schooling variable, which led to a serious issue as traditional Mincerian (OLS) underestimate the estimated return as reported in different studies (Chen et al, 2017).…”

Impacts of Late School Entry on Children's Cognitive Development in Rural Northwestern China—Does Preprimary Education Matter?

“…Village‐level covariates include the full set of village fixed effects. Because there is only one primary school and at most one middle school in each village in rural Gansu (Chen et al ), the village fixed effects effectively control for factors that vary at the village level, such as school quality, prices (e.g. school fees and wage) and local economic conditions.…”