The Difference Of Effect Of Education On Nonfarm Employment In Rural China

With more and more rural residents work in non-farm sector since instead oftraditional farm work in recent years, income difference among rural residents hasbecome larger than before. Researchers have analyzed the issue of enlarging incomedifference from the feature of non-farm employment and non-farm income. As animportant factor in determining human capital and thereby income, the impact ofeducation on non-farm employment and income have been thoroughly analyzed.Specially, returns to education have been estimated with various samples andstatistical methods.Proponents of social stratification theory argue that institutional and structuralfactors play bigger role in determining employment and income than individualfactors, such as years of education, marital status, ages and experiences, and the latterfactors may subject to the impact of the former factors. Considering the huge regionaldifference in terms of their institution and industry structure, regional factor is thushighly important in determine the effect of education on non-farm employment andincome. Therefore, in this paper, we analyze the regional difference in term ofeducation’s impact on non-farm employment and income, and its determinants.Based on previous research, we make an thorough examination on possibleimportant regional factors in determining education’s impact on non-farmemployment and income, including township enterprise, development of the secondand third industry, urbanization, export, per capita arable land, labor migration and thecondition of labor market. These factors vary largely in different regions, resulting inregional differences in returns to education through their impact on supply ofnon-farm employment. Using Hierarchical Generalized Linear Models andHierarchical Linear Models, we estimate returns to education and non-farmemployment opportunity with China Health and Nutrition Survey data andhierarchical data for nine provinces. We have three discoveries: Firstly, there is nosignificant regional difference in terms of education’s impact on non-farm wage income, although there is indeed regional difference in non-farm income; Secondly,there is significant regional difference in education’s impact on non-farmemploymentopportunity;Finally, Export and development of the second and third industry cansignificantly influence education’s impact on non-farm employment, with the formerpositive influence and the latter negative. Moreover, differences in these factors canaccount to certain degree for the regional difference in returns to education innon-farm employment.Based on this paper’s analysis, we offer the following policy suggestions:making effort to transfer export industry from east China the West China; tryingharder to develop the second and third industry in east China, especially to upgradethe second industry; developing education in rural area with an special eye to regionalbalance and the development of fundamental education and professional education.