| Abstract: | 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. |
