Finance and Economics Discussion Series (FEDS)
October 2009
Education's Role in China's Structural Transformation
Soohyung Lee and Benjamin A. Malin
Abstract:
We explore education's role in improving the allocation of labor between China's agricultural and nonagricultural sectors and measure the portion of China's recent growth attributable to this channel. Building from micro-level estimates, we find that education's impact on labor reallocation between sectors accounts for about 9 percent of Chinese growth, whereas its impact on within-sector human capital growth explains only 2 percent. Our findings suggest that, when frictions cause large productivity gaps across sectors and returns to education are greater in higher-productivity sectors, education policy may be a useful tool for increasing efficiency.
Full paper (Screen Reader Version)Keywords: Returns to education, structural transformation, China, labor reallocation, economic growth
PDF: Full Paper
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