The Impact Of College Expansion To Income Inequality

Chinese college expansion policy began in the late 1990 s making college education into the popular stage same as "Great Leap Forward". The rapid expansion of education makes Chinese labor market had undergone two major changes: on the one hand, the number of higher education labor enlarged, on the other hand, the rate of return to education in different educational levels of the workforce changed.Under the conditions of the market mechanism, education is a very important factor to determine the wages of labor, many scholars’ study suggest that there exist close relationship between education and income inequality using cross-country data. So, whether China’s widening wage income gap has something to do with expand college enrollment or not? How different effect relationship between income inequality and wage college enrollment on the labor market? This paper attempts to analyze the impact of empirical research on college enrollment labor income urban residents unequal.This paper uses 2002 and 2008 CHIP(Chinese Household Income Project) survey data to study the effect of college expansion to urban residents’ income inequality, At first, we decompose college expansion’s effect into endowment effect and price effect implementing the RIF derivation. Secondly, we do a empirical test based on RIF method show that the college expansion’s endowment effect and price effect enlarge urban residents’ income inequality to a extent. In addition, we compare the difference between the three income quantiles and the estimation results show that the enlargement of urban residents’ income inequality primarily lies in the widening difference between the highest and the lowest quantile of income. What’s more, we also find there exist "Matthew effect" between urban residents’ income and their return of education..