Market Access and College Education Inequality in China

Speaker:Lijuan Yin (IESR, Jinan University, Assistant Professor)

Host:Yulei Peng(Lingnan College, Sun Yat-sen University, Assistant Professor)

Date and Time: 2:30-4:00 PM on Friday, June 1, 2018


Language: Chinese + English



What are the effects of globalization and market liberalization on human capital investment in the institutional context of China? To answer this question, we developed a tractable general equilibrium model—a new economic geographical model with individuals’ endogenous education choices. The model demonstrates that expanding market access due to globalization, along with the restrictive household registration system and rural land policies of China, tends to intensify rural-urban college educational inequality, though globalization promotes the human capital formation on average; such effects of market access on urban-rural dispersions vary across regions. Based on the testable predictions of the model, we further quantified the effects imposed by market access on individuals’ education decisions by using China Income Project Data for year 1995 and 2002. The empirical evidences demonstrated that each one percent increase in market access is associated with an increase in the difference between the probabilities of getting higher education for urban hukou holders by around 1.2 percentage points than that for rural hukou holders. The policy implication is that reforming hukou system will not achieve the purpose of alleviating rural-urban inequality unless the land use issues associated with hukou are fully addressed.


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