Urban–Rural Differences in Returns to Education and Regional Distribution Characteristics: Evidence from Chinese Household Income Survey Data (1995–2018)

This study estimates the urban and rural returns to education using data from five rounds of the China Household Income Survey from 1995 to 2018, to examine the urban–rural and regional differences and trends in returns to education. After reclassifying migrant workers and those who permanently moved from cities back to the rural sample, the returns to education in rural areas increased significantly. In 2018, the return to education of urban area was 8.3% and the return to education of rural area was 5.8%. The difference between urban and rural area returns to education was significantly reduced to 2.5 percentage point compared with 5.8 percentage point in 2013. In terms of regional differences, the returns to education are higher in economically developed provinces, and the differences in the urban areas of each province tend to narrow, but interprovincial differences in rural returns to education remain evident. After removing the migration sample, the interprovincial differences increase further. Taking prefecture-level cities as examining criteria reveals a gradual dispersion of returns to education across prefectures in both urban and rural areas, suggesting that regional differences are greater between cities than between provinces. Policymakers are encouraged to strategically develop education policies according to local conditions, strengthen labor market construction, and fully leverage the power of science and technology to improve the quality of education to narrow the gap in the return to education between urban and rural areas and between regions, which will generate additional human capital dividends for the nation’s high-quality development.