Publication Type

Journal Article

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

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org/10.1016/j.jdeveco.2010.01.001

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