Publication Type
Journal Article
Version
acceptedVersion
Publication Date
1-2011
Abstract
We investigate the role of education on worker productivity and firms' total factor productivity using a panel of firm-level data from China. We estimate the returns to education by calculating the marginal productivity of workers of different education levels based on estimates of the firm-level production function. We also estimate how the education level of workers and CEO contributes to firms' total factor productivity. Estimated marginal products are much higher than wages, and the gap is larger for highly educated workers. Our estimate shows that an additional year of schooling raises marginal product by 30.1%, and that CEO's education increases TFP for foreign-invested firms. Estimates vary substantially across ownership classes, the effect of schooling on productivity being highest in foreign-invested firms. We infer that market mechanisms contribute to a more efficient use of human capital within firms.
Keywords
Productivity, Returns to education, Marginal product, Firm, China, Transition
Discipline
Asian Studies | Education | Growth and Development | Labor Economics
Research Areas
International Economics
Publication
Journal of Development Economics
Volume
94
Issue
1
First Page
86
Last Page
94
ISSN
0304-3878
Identifier
10.1016/j.jdeveco.2010.01.001
Publisher
Elsevier
Citation
FLEISHER, Belton; YU, Yifan; LI, Haizheng; and KIM, Seonghoon.
Economic transition, higher education and worker productivity in China. (2011). Journal of Development Economics. 94, (1), 86-94.
Available at: https://ink.library.smu.edu.sg/soe_research/2006
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.1016/j.jdeveco.2010.01.001
Included in
Asian Studies Commons, Education Commons, Growth and Development Commons, Labor Economics Commons