Higher education expansion and the rural–urban gap in secondary schooling and labor outcomes: Evidence from China’s 1999 reform

Abstract

This study examines how China’s 1999 expansion of university admissions reshaped rural and urban students’ academic high-school choices and, in turn, rural–urban gaps in schooling and employment. Treating the nationwide expansion of tertiary capacity as an exogenous shock, we use microdata from the 2015 1% Population Sample Survey of China to estimate difference-in-differences models with county and cohort fixed effects. Relative to comparable urban cohorts, rural students exposed to the reform were 2.9 percentage points more likely to complete the academic high school track and accumulated an additional 0.26 years of schooling. The expansion also reallocated rural workers away from low-skill employment by 5.1 percentage points. These findings indicate a strong indirect channel operating through upper-secondary choices, while underscoring the need for complementary investments in rural upper-secondary schools and local non-farm labor markets. The evidence is consistent with changes in expectations and application behavior at the upper-secondary transition: national tertiary expansion increased the perceived attainability of the academic track for rural cohorts, inducing adjustments in continuation decisions.