Credential effects and the returns to education in China

Lin Xiu, Morley Gunderson

Research output: Contribution to journalArticlepeer-review

7 Scopus citations


Using the China Household Income Project (CHIP) data for 1995 and 2002, we examine the returns to education in China, separating out credential effects from pure years-of-schooling effects. The results are broadly consistent with the implications of China moving towards a market-oriented economy: increasing returns to education where both years of schooling and credentials from completing key phases are rewarded; a decline in the importance of credentials as firms have more discretion to select the best-suited employees irrespective of their credentials; more emphasis on credentials in the state sector; less emphasis on credentials for long-tenured employees for whom the employer has more opportunity to assess productivity without relying on credentials; and a greater importance of credentials for females for whom the value of such signals may be more important.

Original languageEnglish (US)
Pages (from-to)225-248
Number of pages24
Issue number2
StatePublished - Jun 2013


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