Birth season, water and education return in China

This essay investigate the returns to education in China using pooled CHNS (China Health and Nutrition Survey) dataset before 2000 (including 1989, 1991, 1993 and 1997) and after 2000 (including 2000, 2004 and 2006). Based on the standard Mincerian human capital earning function, we adopt the OLS and IV models to see the difference of controlling endogeneity of schooling or not. Education is measured in two ways: years of schooling (input) and highest educational qualification (output, 5 categories of educational levels). We find that OLS estimate of the returns to schooling and education levels in the 2000s is higher than before, and higher education, higher return. In addition, if we do not control for endogeneity bias of schooling, the OLS estimates of the returns to schooling will be underestimated, especially before 2000.