Title: Three Essays on the Higher Education Expansion in China
Description: My dissertation intends to better understand the impacts of large-scale education expansion programs on students’ education and labor market outcomes both by reviewing related theory and prior literature, and by empirically analyzing a radical and large-scale higher education expansion program initiated in 1999 in China. In Chapter 1, I review theories, methods and empirical studies on the labor market consequences of education expansion from both the partial equilibrium treatment effect and general equilibrium structural model literature. This chapter serves as the theoretical and methodological foundation for my later analyses in Chapter 2 and Chapter 3, and provides motivation for my empirical work because prior literature has not reached a consensus in terms of the impacts of large-scale education expansion programs on individuals’ labor market outcomes or the wage structure in the labor market. In Chapter 2, I take advantage of the fact that the substantially expanded access to higher education after China’s higher education expansion provides exogenous variation in the probability of college attendance for students of different cohorts and coming from different provinces.

I thus employ a two-way fixed-effect model to estimate the expansion’s causal impacts on individuals’ education and labor market outcomes, and find that the expansion substantially improved educational outcomes, such as years of schooling completed, the probabilities of attending college and obtaining any post-secondary degree. The expansion also increased treated individuals’ probability of working and earning positive income, and modestly improved their hourly income. However, the expansion’s earnings effects are less robust to the exclusion of two largest metropolitan cities in China and the inclusion of province-year-level time-varying covariates to control for potential cofounding influences. In Chapter 3, I exploit multiple repeated cross-sections of data to explore how the expansion affects the labor market at large, especially the college-high school earnings gap. Incorporating an aggregate labor supply model with imperfect substitution across labor with the same education level but in different age groups, I decompose the changes in age-group specific college premium over time into changes in the aggregate and cohort-specific relative supply of college-educated (vs. high school-educated) labor, and in the aggregate relative demand for college-educated labor.

My findings show that a 1 percent increase in the relative supply of BA-educated workers within one’s own cohorts would depress the BA-HS wage gap by 0.04 percentage point. Given that college enrollment increased by nearly 4 times from 1998 to 2005, the negative cohort effects could be substantial: for example, the cohort-specific relative supply for the youngest age group in my analysis increased by 112 percent from 2002 to 2009, suggesting an additional 4.5 percentage points decrease in the BA-HS wage gap for workers of this particular age group, on top of the effects of changes in aggregate relative supply and demand that are borne by workers in all age groups. Moreover, my estimates reveal a steadily increasing relative demand for BA-educated labor that raises college premium by approximately 2-3 percentage points annually; it is mitigated by the negative effects from the increase in the aggregate relative supply of BA-educated labor though; the latter effect also implies that the expansion has negative spillover effects on workers who attended college before the expansion.

Putting together, my dissertation provides a holistic picture of the full impacts of one of the largest education expansion program on record. My work is among the first to systematically analyze how the expansion affects “treated” individuals and the labor market at large, and therefore could contribute to all levels of decision-making. Findings from my analyses could also have global implications for much broader issues such as education-related income inequality, and the general equilibrium and distributional effects of large-scale social programs.