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Employer Learning and the Dynamics of Returns to Universities: Evidence from Chinese Elite Education during University Expansion

Sylvie Démurger, Eric A. Hanushek, Lei Zhang
Published Date: 
Revised March 2023
NBER Working Paper No. 25955
National Bureau of Economic Research

This paper estimates the return to an elite university education over a college graduate’s career in contemporary China. We find a substantial premium for graduating from an elite Chinese university at the job entry that declines quickly in early career before starting to recover subsequently. This pattern is entirely driven by the post-expansion cohorts who entered college after the higher education expansion that started in 1999. It is more pronounced in coastal provinces and in economically more developed regions, where individual skills are highly rewarded in the labor market. Both male and female elite college graduates experience the same dynamic pattern of the elite premium, but individual skills are much more rewarded over the entire career for females than males. The results are consistent with predictions of asymmetric employer learning models, both at the job entry and at the mid-career when individuals are up for promotions.