RT Journal Article
SR Electronic
T1 Labor Market Experience and Returns to College Education in Fast-Growing Economies
JF Journal of Human Resources
FD University of Wisconsin Press
SP 289
OP 325
DO 10.3368/jhr.0421-11629R2
VO 60
IS 1
A1 Li, Hongbin
A1 Liang, James
A1 Wu, Binzhen
YR 2025
UL http://jhr.uwpress.org/content/60/1/289.abstract
AB China’s college admissions increased fivefold between 1998 and 2009. While the college premium for young workers declined, that for senior workers increased in this period. In our general equilibrium model, a rising demand for skills (education and experience) explains both trends. A demand shock leads to an expansion in the elastic college enrollment, depressing the college premium for young workers. With an inelastic supply, experienced college graduates continue to enjoy a rising premium. Despite the low immediate premium, young individuals continue to flood into colleges because they foresee high lifetime returns. The lifetime college premium differs significantly from the cross-sectional premium estimated by the Mincer equation. Simulations match empirical results well.