ABSTRACT
Increasing the income of rural residents and accelerating rural industrialization are among the priorities of the Chinese government. Human capital, especially education, plays an important role in this process. This chapter investigates the role played by education in rural industrialization and evaluate China’s rural labor market in the 1990s by estimating the return to education. Using the data from the China Health and Nutrition Survey (CHNS), it aims to estimate the role of education in wage determination and in increasing the probability of being a wage earner. The CHNS contains valuable information about education and income, though its main concern is health and nutrition. At the micro level, existing research indicates that education provides laborers with knowledge, making them more skillful and thus more productive. The chapter describes a wage equation within the wage sector and a migration model to examine returns on education both in terms of higher wages and off-farm job access.
