Returns to college education of Chinese manufacturing employees: Who benefits more?

Abstract

Using the China Employer-Employee Survey (CEES) data, this study examines the returns to college education for employees across China's manufacturing industry, most of them work in small and medium-sized enterprises (SME). Our baseline model finds that while the 1999 higher education (HE) expansion has no significant impact on college enrollment for male employees, it significantly increases college enrollment for female employees by 23.7% in the manufacturing sector. College education significantly increases the returns by 45.20% for males and 88.33% for females. Moreover, there is heterogeneity in the effects by potential gains: individuals who failed to attend college would have had a higher return compared to college graduates, indicating reverse selection into HE. Further analysis reveals that the effects are more pronounced among female managers, middle birth cohorts (born between 1984 and 1987), female vocation-track degree holders, and STEM graduates. Additionally, college education facilitates employment in roles requiring cognitive skills and reduces the likelihood of female employees performing physically demanding tasks.