A new paper (gated) by a gaggle of economists (is this a new trend? I’ve never seen so many papers with five or six names on them than as of late), shows that compulsory schooling in China helped raise average educational attainment, and did a particularly good job of getting girls to stay in school. Girls stayed in school an average of 1.17 years longer, and boys an extra 0.4 years. I’ve yet to really get into this paper, but they use what looks like a neat instrument to identify the effect causally. The compulsory education policy was implemented at different times, so different regions were subject to the policy at different times.
As China transforms from a socialist planned economy to a market-oriented economy, its returns to education are expected to rise to meet those found in middle-income established market economies. This study employs a plausible instrument for education: the China Compulsory Education Law of 1986. We use differences among provinces in the dates of effective implementation of the compulsory education law to show that the law raised overall educational attainment in China by about 0.8 years of schooling. We then use this instrumental variable to control for the endogeneity of education and estimate the returns to an additional year of schooling in 1997-2006. Results imply that the overall returns to education are approximately 20 percent per year on average in contemporary China, fairly consistent with returns found in most industrialized economies. Returns differ among subpopulations; they increase after controlling for endogeneity of education.
“The Returns to Education in China: Evidence from the 1986 Compulsory Education Law.”
Hai Fang, Karen N. Eggleston, John A. Rizzo, Scott Rozelle, and Richard J. Zeckhauser
NBER Working Paper No. 18189, June 2012