The Role of Education in Wage Determination in China's Rural Industrial Sector

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Abstract
This paper uses data for China's most market-oriented sector—the rural industrial sector—to test the impact of education on wage determination after 10 years of economic reform. It is found that, although education has different impacts on wage determination for various groups over a range of institutional and technological settings, this difference reflects a labour productivity effect. This fact suggests that, in line with the development of the rural industrial sector and technological change, education will increase in importance as a determinant of labour productivity and, thus, of wage determination in China's rural industrial sector.

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