Does Education Still Pay Off in Rural China: Revisit the Impact of Education on Off‐farm Employment and Wages

Abstract The present study considers how education affects off‐farm job participation and wages. We use a nationally representative dataset from a survey conducted in 5 provinces, 101 villages and 808 households by the authors in early 2005. The empirical results show that educational attainment, skill training and years of experience of rural residents have positive, statistically significant effects on off‐farm employment. The average return to a year of education is 7 percent, which is higher than those observed in previous studies. We also find the return to an additional year of schooling to be higher for post‐junior high schooling than for junior high and below schooling: 11.8 versus 3.2 percent. We conclude that not only does education still pays off in rural China, but also the rate of return to education is increasing over time.