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Substitution or complementation: the influence of parents’ educational level on sheepskin effects in the individual returns to education in China

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Abstract

Numerous researches have already revealed the existence of sheepskin effects and proved the signaling value of education based on empirical materials from developing or developed countries; however, only a few empirical studies have explored the mechanism lying behind the proved educational signaling value. With this regard, based on recent 6-year cross-section data from China General Social Survey, the authors discussed the interactive effects between the educational signaling value and parents’ educational level. After correcting the selective bias and endogenous issues by multiple methods—Heckman two-stage, IV, and comprehensive models combined HTS and IV—it finds that there exist obvious sheepskin effects in the returns to education in China and robust complementary effects between parents’ educational level and the signaling function of individual’s education on their personal income.

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Notes

  1. CGSS’ sampling design, instruction, items, and variables can be found at http://www.chinagss.org/.

  2. It shall be noted that the valid samples only act as the basis sample for regular analysis, and the samples would be enlarged into full sample when correcting the selective bias, which means the samples that do not have access to the labor market or those in non-employment series would be involved in the probability function analysis.

  3. CPI 2006–2012: (last year = 100) 101.5, 104.8, 105.9, 99.3, 103.3, 105.4, 103.6. http://data.stats.gov.cn/workspace/index?m=hgnd.

  4. In previous CGSS survey, companies are classified into six categories, the state-owned or state-controlled, collective ownership or collective holdings, private/minying or private/minying holdings, Hongkong-Macao-Taiwan invested companies or holdings, foreign companies or foreign holdings, other. In this research, “public sectors” (state-owned or collective) refers to the first two categories (indicated by 1), and other four categories are included in “non-public sectors” (reference group, indicated by 0)

  5. According to ILO (1988), there are nine major groups, chief executives, senior officials, and legislators; professionals; technicians and associate professionals; general clerk; service and sales workers; skilled agricultural, forestry and fishery workers; craft and related trades workers; plant and machine operators, and assemblers; elementary occupations.

  6. The percentage increase in hourly salary associated with a dummy variable coefficient is calculated as, \({e^{\mathop \beta \limits^{ \wedge } }} - 1\)where e is the base of natural logarithm, \(\mathop \beta \limits^{ \wedge }\) is the estimated coefficient of dummy variable; for example, the estimated coefficient of college education degree is 0.414, and then the sheepskin effects of college education is \({e^{0.414}} - 1\) = 0.513.

  7. Because the parameter of inverse mills ratio is negative significantly, so the estimate by OLS (without modify self-selection bias) will overestimate these variables’ effects.

  8. The possible reason for the higher estimated results by IV than the estimated results by OLS is that, the IVs in our models may be not perfect and will raise the bias to some extent. This situation always occurs in previous studies on the returns to education. (Card 1999; Griliches 1977; Gunderson and Oreopoulos 2010).

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Acknowledgements

Data analyzed in this paper were collected by the research project “Chinese General Social Survey (CGSS)” carried out by the National Survey Research Center, Renmin University of China (NSRC). The authors appreciate the assistance in providing data by the institutes and individuals aforementioned. The views expressed herein are those of the authors.

Funding

The research was supported by funds from the National Natural Science Foundation in China, for the project “The Relationship between the Value-Added in Higher Education and Graduates’ Employment: Theoretical Analysis and Empirical Examination Based on Educational Economics” (Grant No. 71673097).

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  1. School of Education, Huazhong University of Science & Technology, Wuhan, 430074, China

    Qinggen Zhang

  2. School of English Education, Guangdong University of Foreign Studies, Guangzhou, 510006, China

    Zhiyuan Liu

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  1. Qinggen Zhang
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Zhang, Q., Liu, Z. Substitution or complementation: the influence of parents’ educational level on sheepskin effects in the individual returns to education in China. Asia Pacific Educ. Rev. 20, 595–606 (2019). https://doi.org/10.1007/s12564-019-09578-0

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