Skip to main content

Economic consequences of horizontal stratification in postsecondary education: evidence from urban China

Abstract

Drawing on nationwide representative data, we study the patterns of horizontal stratification of higher education in contemporary urban Chinese society, examining how college major, location, and ranking affect college graduates’ occupational income and the likelihood of assuming a managerial position. The results suggest that (1) college major differentiates graduates’ occupational income, with STEM and professional majors having significant economic advantages. (2) College ranking is significantly correlated with the likelihood of assuming a managerial position, implying that college ranking is an effective signal of prestige to employers in urban China. (3) A “Big City Effect” is detected as college location is significantly associated with salary levels after controlling for job location. This study adds an Eastern case to the literature on education stratification. Theoretical implications of empirical findings are also discussed

This is a preview of subscription content, access via your institution.

Fig. 1

Notes

  1. 1.

    We very much thank an anonymous reviewer for directing us to these studies.

  2. 2.

    The percentage of graduates from the medical school is larger than that of law school graduates in public sectors. Based on the CGSS 2008, the percentage of medical school graduates is 14.84 percent, while for law school graduates, 3.85 percent.

  3. 3.

    The “Big City Effect” should not be attributed to the effect of job location, as the Big City Effect is still significant after controlling for job location. Besides, no multi-collinearity problem is detected between college location and job location.

  4. 4.

    According to the CGSS 2008, 15.65 percent of urban residents have attended college, in contrast to one percent in rural China.

  5. 5.

    This measure distinguishes between low-level employees and those with some level of workplace authority. However, we are unable to distinguish between different degrees of authority. Also, with a descriptive percentage of around 50 percent, the extent of variation of this variable is moderate.

  6. 6.

    Education refers to a series of education-related disciplines including Educational Psychology, Library Science, and Information Science. The category of “Others” mainly includes the Social Sciences such as Demography, Political Science, and Sociology, and Arts and Sports. Due to the relative small sample size, we cannot examine the specific economic consequences of the social sciences.

  7. 7.

    For instance, Minzu (Nationality) University of China (MUC) is affiliated under the State Ethnic Affairs Commission and a large portion of college graduates at MUC are minorities. Chinese People’s Public Security University was affiliated under the Ministry of Public Security and admitted college students usually satisfy certain physical requirements.

  8. 8.

    The number of universities at towns is too small, so we combined towns and prefectural-level cities. Also, the prestigious universities in China are mainly located in province capitals and municipalities directly under the central government. Since there are only four municipalities directly under the central government, we decide to combine province capitals and municipalities directly under the central government.

  9. 9.

    One concern in this operation is the multi-collinearity between these three variables. Supplementary assessment shows that this concern does not exist. Moreover, controlling for any of the two variables does not alter the coefficient of the third one.

  10. 10.

    Due to space consideration, these results are not presented here, but available upon request.

  11. 11.

    A managerial position, however, may not be directly related to a higher payment, for several possible reasons. For instance, there might be a trade-off between income and managerial position where an industry with rapid promotion may have a low level of average income. Another reason lies in the relatively “loose” definition of managerial position used here, as the measure does not require a formal managerial title, but rather, increased authority over others in the workplace. In this case, the wage gap between those who assume a managerial position and those who do not can be small.

References

  1. Allison, P. D. (2001). Missing data. Thousand Oaks, CA: Sage.

    Google Scholar 

  2. Autor, D. H., Levy, F., & Murnane, R. J. (2003). The skill content of recent technological change: An empirical investigation. Quarterly Journal of Economics, 118, 1279–1333.

    Article  Google Scholar 

  3. Bai, L. (2006). Graduate unemployment: Dilemmas and challenges in China’s move to mass higher education. The China Quarterly, 185, 128–144.

    Article  Google Scholar 

  4. Becker, G. S. (1964). Human capital: A theoretical and empirical analysis, with special reference to education. New York City, NY: Columbia University Press.

    Google Scholar 

  5. Behrman, J. R., Rosenzweig, M. R., & Taubman, Paul. (1996). College choice and wages: Estimates using data on female twins. Review of Economics and Statistics, 78, 672–685.

    Article  Google Scholar 

  6. Bobbit-Zeher, D. (2007). The Gender Income Gap and the Role of Education. Sociology of Education, 80, 1–22.

    Article  Google Scholar 

  7. Brand, J. E., & Halaby, C. N. (2006). Regression and matching estimates of the effects of elite college attendance on educational and career achievement. Social Science Research, 35, 749–770.

    Article  Google Scholar 

  8. Buchmann, C., & Hannum, E. (2001). Education and stratification in developing countries: Review of theories and empirical research. Annual Review of Sociology, 27, 77–102.

    Article  Google Scholar 

  9. Busemeyer, M., & Trampusch, C. (2012). The comparative political economy of collective skill formation. In M. R. Busemeyer & C. Trampusch (Eds.), The political economy of collective skill formation (pp. 3–14). New York: Oxford University Press.

    Google Scholar 

  10. Busemyer, M. (2009). Asset specificity, institutional complementarities and the variety of skill regimes in coordinated market economies. Socio-Economic Review, 7, 375–406.

    Article  Google Scholar 

  11. Charles, M., & Bradley, K. (2002). Equal but Separate? A cross-national study of sex segregation in higher education. American Sociological Review, 67, 573–599.

    Article  Google Scholar 

  12. Dale, S. B., & Krueger, A. B. (2002). Estimating the payoff to attending a more selective college: An application of selection on observables and unobservables. The Quarterly Journal of Economics, 117, 1491–1527.

    Article  Google Scholar 

  13. Davies, S., & Zarifa, D. (2012). The stratification of universities: Structural inequality in Canada and the United States. Research in Social Stratification and Mobility, 30, 143–158.

    Article  Google Scholar 

  14. Fang, A., Jiang, W., Wang, H., & Du, X. (2003). A comparative study on the learning time management between learning disabilities and learning paragons. Elementary and Secondary Education in Foreign Countries, 4, 45–49. (in Chinese).

    Google Scholar 

  15. Freeman, J., & Hirsch, B. T. (2008). College majors and knowledge content of jobs. Economics of Education Review, 27, 517–535.

    Article  Google Scholar 

  16. Gerber, T. P., & Cheung, S. Y. (2008). Horizontal stratification in postsecondary education: Forms, explanations, and implications. Annual Review of Sociology, 34, 299–318.

    Article  Google Scholar 

  17. Gerber, T. P., & Schaefer, D. R. (2004). Horizontal stratification of higher education in Russia: Trends, gender differences, and labor market outcomes. Sociology of Education, 77(1), 32–59.

    Article  Google Scholar 

  18. Grogger, J., & Eide, E. (1995). Changes in college skills and the rise in the college wage premium. The Journal of Human Resources, 30, 280–310.

    Article  Google Scholar 

  19. Gustafsson, B., & Li, S. (2001). The anatomy of rising earnings inequality in urban China. Journal of Comparative Economics, 29, 118–135.

    Article  Google Scholar 

  20. Hannum, E., & Wang, M. (2006). Geography and educational inequality in China. China Economic Review, 17, 253–265.

    Article  Google Scholar 

  21. Hao, W., Long, Z., & Zhang, J. (2011). The history of higher education in the People‘s Republic of China. Beijing: New World Press. (in Chinese).

    Google Scholar 

  22. Hartog, J., Sun, Y., & Ding, X. (2010). University rank and bachelor’s labour market positions in China. Economics of Education Review, 29, 971–979.

    Article  Google Scholar 

  23. Hirano, K., & Imbens, G. (2001). Estimation of causal effects using propensity score weighting: An application to data on right heart catheterization. Health Services and Outcomes Research Methodology, 2, 259–278.

    Article  Google Scholar 

  24. Horvitz, D. G., & Thompson, D. J. (1952). A generalization of sampling without replacement from a finite population. Journal of the American Statistical Association, 47, 663–685.

    Article  Google Scholar 

  25. Hu, A., & Hibel, J. (2014). Increasing heterogeneity in the economic returns to higher education in urban China. Social Science Journal. doi:10.1016/j.soscij.2013.09.002.

  26. Knofczynski, G. T., & Mundfrom, D. (2007). Sample sizes when using multiple linear regression for prediction. Educational and Psychological Measurement, 68, 431–442.

    Article  Google Scholar 

  27. Lemieux, T. (2006). Postsecondary education and increasing wage inequality. American Economic Review, 96, 195–199.

    Article  Google Scholar 

  28. Li, L. (2004). China’s higher education reform 1998–2003: A summary. Asia Pacific Education Review, 5(1), 14–22.

    Article  Google Scholar 

  29. Li, B., & Walder, A. (2001). Career advancement as party patronage: Sponsored Mobility into the Chinese administrative elite, 1949–1996. American Journal of Sociology, 106, 1371–1408.

    Article  Google Scholar 

  30. Li, C., & Wang, B. (2009). Research of the occupational status among college graduates. http://e-sociology.cass.cn/pub/shxw/shgz/shgz53/P020090120330059680984.pdf retrieved on 2014-9-9 (in Chinese).

  31. Li, H., Meng, L., Shi, X., & Wu, B. (2012). Does attending elite colleges pay in China? Journal of Comparative Economics, 40, 78–88.

    Article  Google Scholar 

  32. Loyalka, P., Song, Y., & Wei, J. (2012). The effects of attending selective college tiers in China. Social Science Research, 41, 287–305.

    Article  Google Scholar 

  33. Ma, W. (2012). Why the rural poor get fewer opportunities to leading research universities? Asia Pacific Education Review, 13, 263–271.

    Article  Google Scholar 

  34. Maxwell, S. E. (2000). Sample size and multiple regression analysis. Psychological Methods, 5, 434–458.

    Article  Google Scholar 

  35. Melguizo, T., & Wolniak, G. (2012). The earnings benefits of majoring in STEM fields among high achieving minority students. Research in Higher Education, 53, 345–383.

    Article  Google Scholar 

  36. Mincer, J. (1974). Schooling, experience, and earnings. New York City, NY: Columbia University Press.

    Google Scholar 

  37. Mok, K.-H. (2012). Bringing the state back in: Restoring the role of the state in chinese higher education. European Journal of Education, 47(2), 228–241.

    Article  Google Scholar 

  38. Mok, K.-H., & Ngok, K. L. (2008). One country, diverse systems: politics of educational decentralization and challenges for regulatory state in Post-Mao China. China Review, 8, 169–199.

    Google Scholar 

  39. Morgan, S., & Winship, C. (2007). Counterfactuals and causal inference: Methods and principles for social research. New York: Cambridge University Press.

    Book  Google Scholar 

  40. Mortensen, D. T., & Pissarides, C. A. (1999). New developments in models of search in the labor market. In O. Ashenfelter & D. Card (Eds.), Handbook of labor economics (Vol. 3, pp. 2567–2627). Amsterdam: North Holland.

    Google Scholar 

  41. Nee, V., & Cao, Y. (2005). Market transition and the firm: Institutional change and income inequality in urban China. Management and Organization Review, 1, 23–56.

    Article  Google Scholar 

  42. Nicholson, S. (2008). Medical career choices and rates of return. In F. A. Sloan & H. Kasper (Eds.), Incentives and choice in health care (pp. 195–226). Cambridge: MIT Press.

    Google Scholar 

  43. Noelke, C., Michael, G., & Kogan, I. (2012). Uniform inequalities: institutional differentiation and the transition from higher education to work in post-socialist central and eastern Europe. European Sociological Review, 28, 704–716.

    Article  Google Scholar 

  44. Paglin, M., & Rufolo, A. (1990). Heterogeneous human capital, occupational choice, and male–female earnings differences. Journal of Labor Economics, 8, 123–144.

    Article  Google Scholar 

  45. Pascarella, E. T., & Terenzini, P. T. (2005). How college affects students revisited: A third decade of research. New York City, NY: Jossey Bass.

    Google Scholar 

  46. Qin, X., Li, L., & Hsieh, C.-R. (2013). Too few doctors or too low wages? Labor supply of health care professionals in China. China Economic Review, 24, 150–164.

    Article  Google Scholar 

  47. Rivera, L. A. (2011). Ivies, extracurriculars, and exclusion: Elite employers’ use of educational credentials. Research in Social Stratification and Mobility, 29, 71–90.

    Article  Google Scholar 

  48. Rivera, L. A. (2012). Diversity within reach: Recruitment versus hiring in elite firms. Annals of the American Academy of Political and Social Science, 639, 70–89.

    Article  Google Scholar 

  49. Robst, J. (2007). Education and job match: The relatedness of college major and work. Economics of Education Review, 26, 397–407.

    Article  Google Scholar 

  50. Roksa, J., & Levey, T. (2010). What can you do with that degree? College major and occupational status of college graduates over time. Social Forces, 89, 389–415.

    Article  Google Scholar 

  51. Rosenbaum, P. (2002). Observational studies. New York: Springer.

    Book  Google Scholar 

  52. Schofer, E., & Meyer, J. (2005). The worldwide expansion of higher education in the twentieth century. American Sociological Review, 70, 898–920.

    Article  Google Scholar 

  53. Showalter, M. H., & Thurston, N. K. (1997). Taxes and labor supply of high-income physicians. Journal of Public Economics, 66, 73–97.

    Article  Google Scholar 

  54. Spence, M. (1973). Job market signaling. Quarterly Journal of Economics, 87, 355–374.

    Article  Google Scholar 

  55. Su, S. (2012). The policy environment of private higher education in China: A discussion based upon property ownership rights. Asia Pacific Education Review, 13, 157–169.

    Article  Google Scholar 

  56. Thomas, S. L., & Zhang, L. (2005). Post-baccalaureate wage growth within four years of graduation: The effects of college quality and college major. Research in Higher Education, 46, 437–459.

    Article  Google Scholar 

  57. Treiman, D. (2013). Trends in educational attainment in China. Chinese Sociological Review, 45(3), 3–25.

    Article  Google Scholar 

  58. UNESCO. (2012). UIS Statistics in Brief. Retrieved at http://stats.uis.unesco.org/unesco/TableViewer/document.aspx?ReportId=121&IF_Language=eng&BR_Country=1560.

  59. Van de Werfhorst, H. G. (2002). Fields of study, acquired skills, and the wage benefit from a matching job. Acta Socioligica, 45, 287–303.

    Article  Google Scholar 

  60. Weiss, A. (1995). Human capital vs. signalling explanations of wages. The Journal of Economic Perspectives, 9, 133–154.

    Article  Google Scholar 

  61. White, M. (2009). Paradoxes of China’s economic boom. Annual Review of Sociology, 35, 371–392.

    Article  Google Scholar 

  62. Winston, G. C. (1999). Subsidies, hierarchy and peers: the awkward economics of higher education. The Journal of Economic Perspectives, 13, 13–36.

    Article  Google Scholar 

  63. Wu, H., & Luo, Y. (2012). Vertical distribution structure of colleges and universities in China: The phenomenon of assembling in political centers. Modern Education Management (Chinese), 5, 11–16. (in Chinese).

    Google Scholar 

  64. Wu, X., & Treiman, D. (2007). Inequality and equality under Chinese socialism: The hukou system and intergenerational occupational mobility. American Journal of Sociology, 113, 415–445.

    Article  Google Scholar 

  65. Wu, X., & Xie, Y. (2003). Does the market pay off? Earnings inequality and returns to education in urban China. American Sociological Review, 68, 425–442.

    Article  Google Scholar 

  66. Yang, H., & Bai, X. (2010). Comparison of top-down attentional control between students with high abilities and students with learning difficulties. Journal of Tianjin Normal University (Social Science), 4, 77–80. (in Chinese).

    Google Scholar 

  67. Yeung, W.-J. J. (2013). Higher education expansion and social stratification in China. Chinese Sociological Review, 45(4), 54–80.

    Article  Google Scholar 

  68. Zhang, X., & Kanbur, R. (2005). Spatial inequality in education and health care in China. China Economic Review, 16, 189–204.

    Article  Google Scholar 

  69. Zhou, J., & Li, Y. (2008). Status analysis and countermeasures study on fund input of higher vocational education. Vocational and Technical Education, 29, 24–26. (in Chinese).

    Google Scholar 

  70. Zhou, X., Moen, P., & Tuma, N. B. (1998). Educational stratification in urban China: 1949–94. Sociology of Education, 71, 199–222.

    Article  Google Scholar 

  71. Zhou, H., & Zhao, H. (2012). Revisiting the situation of firms’ involvement in occupational education. Enterprise Economy, 12, 73–75 (in Chinese).

    Google Scholar 

Download references

Acknowledgments

This research was supported by the Junior Scholar Project of the Ministry of Education of the People’s Republic of China (13YJC840014), the Chenguang Project of the Shanghai Municipal Education Commission (13CG06), the Research Initiation Project Funding for New Faculty Members of Fudan University, and the Capability Promotion Project Funding of Fudan University. The first author also gratefully acknowledges the general support from the research fund of the School of Social Development and Public Policy at Fudan University.

Author information

Affiliations

Authors

Corresponding author

Correspondence to Anning Hu.

Appendix

Appendix

See appendix Tables 5 and 6, and Fig. 1.

Table 5 Results of multinomial logistic model predicting college majors
Table 6 Results of multinomial logistic model predicting college location and ranking

Rights and permissions

Reprints and Permissions

About this article

Verify currency and authenticity via CrossMark

Cite this article

Hu, A., Vargas, N. Economic consequences of horizontal stratification in postsecondary education: evidence from urban China. High Educ 70, 337–358 (2015). https://doi.org/10.1007/s10734-014-9833-y

Download citation

Keywords

  • Horizontal stratification
  • College major
  • College location
  • College ranking
  • Big City Effect