Heterogeneous Returns to Education and Gender Wage Inequality in China: An IV-Quantile Regression Analysis

Abstract

The paper explored the heterogeneous returns to education and gender wage inequality within wage dispersal in China by utilizing East Asian Social Survey (EASS) micro-level data from 2006 and 2016. Education is found to increase wages by about 7.2% on average, though the actual impact appears to be higher, around 15%, once underlying biases are considered. The returns remain fairly stable, between 7.2% and 7.5%, across most of the wage distribution. However, evidence shows clear heterogeneous returns to schooling rise from 12.2% at the 25th percentile to 15.7% at the 50th percentile, and further to 16.6% at the 75th percentile, indicating that individuals at higher wage levels benefit more from additional education. In terms of gender differences, results suggest a greater wage disparity at the lower end of the distribution, with men earning about 14.8% compared to 9.1% for women. The investigated study contributes unique visions by jointly observing both temporal and distributional magnitudes of educational returns in China, going beyond average effects. The implications recommend that while schooling stays to be a critical driver of wage growth, its paybacks are randomly dispersed and reinforce current disparities. Representatives should consider targeted interventions to balance labor market outcomes, especially for females.