Advertisement

Asia Pacific Education Review

, Volume 20, Issue 4, pp 595–606 | Cite as

Substitution or complementation: the influence of parents’ educational level on sheepskin effects in the individual returns to education in China

  • Qinggen Zhang
  • Zhiyuan LiuEmail author
Article

Abstract

Numerous researches have already revealed the existence of sheepskin effects and proved the signaling value of education based on empirical materials from developing or developed countries; however, only a few empirical studies have explored the mechanism lying behind the proved educational signaling value. With this regard, based on recent 6-year cross-section data from China General Social Survey, the authors discussed the interactive effects between the educational signaling value and parents’ educational level. After correcting the selective bias and endogenous issues by multiple methods—Heckman two-stage, IV, and comprehensive models combined HTS and IV—it finds that there exist obvious sheepskin effects in the returns to education in China and robust complementary effects between parents’ educational level and the signaling function of individual’s education on their personal income.

Keywords

Signaling value Sheepskin effects Parents’ educational level Selective bias Endogeneity 

Notes

Acknowledgements

Data analyzed in this paper were collected by the research project “Chinese General Social Survey (CGSS)” carried out by the National Survey Research Center, Renmin University of China (NSRC). The authors appreciate the assistance in providing data by the institutes and individuals aforementioned. The views expressed herein are those of the authors.

Funding

The research was supported by funds from the National Natural Science Foundation in China, for the project “The Relationship between the Value-Added in Higher Education and Graduates’ Employment: Theoretical Analysis and Empirical Examination Based on Educational Economics” (Grant No. 71673097).

References

  1. Anna, C., & Mauricio, C. (2009). Sheepskin effects and the relationship between earnings and education: Analyzing their evolution over time in Brazil. Revista Brasileira de Economia, 63(3), 209–231.Google Scholar
  2. Arabsheibani, G., & Manfor, L. (2001). Non-linearities in returns to education in Libya. Education Economics, 9(2), 139–144.Google Scholar
  3. Arrow, K. J. (1973). Higher education as a filter. Journal of Public Economics, 2(3), 193–216.Google Scholar
  4. Bauer, T., Patrick, D., & Haisken-DeNew J, P. (2005). Sheepskin effects in Japan. International Journal of Manpower, 26(4), 320–335.Google Scholar
  5. Belman, D., & Heywood, J. (1997). Sheepskin effects by cohort: Implications of job matching in a signaling model. Oxford Economic Papers, 49(4), 623–637.Google Scholar
  6. Bian, Y. (1997). Bringing strong ties back in: Indirect ties, network bridges, and job searches in China. American Sociological Review, 62(3), 366–385.Google Scholar
  7. Bitzan, J. (2009). Do sheepskin effects help explain racial earnings differences? Economics of Education Review, 28(6), 759–766.Google Scholar
  8. Cameron, S., & Heckman, J. (1993). The nonequivalence of high school equivalents. Journal of Labor Economics, 11(Part 1), 1–47.Google Scholar
  9. Card, D. (1999). The causal effect of education on earnings. In O. Ashenfelter & D. Card (Eds.) Handbook of labor economics. Amsterdam: Elsevier Science Publishers.Google Scholar
  10. Chatterji, M., Seaman, P., & Singell, L. (2003). A test of the signaling hypothesis. Oxford Economic Papers, 55(2), 191–216.Google Scholar
  11. Chevalier, A., Harmon, C., Walker, I., & Zhu, Y. (2004). Does education raise productivity, or just reflect it? Economic Journal, 142(11), 499–517.Google Scholar
  12. Coleman, J. (1968). The concepts of equality of educational opportunity. Harvard Educational Review, 38(1), 7–22.Google Scholar
  13. Coleman, J. (1988). Social capital in the creation of human capital. American Journal of Sociology, 94, 95–120.Google Scholar
  14. Ferrer, A., & Riddell, W. (2002). The role of credentials in the Canadian labour market. Canadian Journal of Economics/Revue canadienne d’économique, 35(4), 879–905.Google Scholar
  15. Flores-Lagunes, A., & Audrey, L. (2010). Interpreting degree effects in the returns to education. Journal of Human Resources, 45(2), 439–467.Google Scholar
  16. Gibson, J. (2000). Sheepskin effects and the returns to education in New Zealand: Do they differ by ethnic groups. New Zealand Economic Papers, 34(2), 201–220.Google Scholar
  17. Granovetter, M. (1973). The strength of weak ties. American Journal of Sociology, 78(6), 1360–1380.Google Scholar
  18. Griliches, Z. (1977). Estimating the returns to schooling: Some econometric problems. Econometrica, 45(1), 1–22.Google Scholar
  19. Gunderson, M., & Oreopoulos, P. (2010). Returns to education in developed countries. In E. Barker, M. McGaw & P. Peterson (Eds.), International encyclopaedia of education. New York: Elsevier Publishers.Google Scholar
  20. Guo, D., Hu, Y., & Lin, J. (2014). Rates of return to education for china’s formal employments based on model specification test. Statistical Research, 31(8), 19–23.Google Scholar
  21. Habermalz, S. (2006). More detail on the pattern of returns to educational signals. Southern Economic Journal, 73(1), 125–135.Google Scholar
  22. Hungerford, T., & Solon, G. (1987). Sheepskin effects in returns to education. The Review of Economics and Statistics, 69(1), 175–178.Google Scholar
  23. Jaeger, D., & Page, M. (1996). Degrees matter: new evidence on sheepskin effects in the returns to education. Review of Economics and Statistics, 78(4), 733–740.Google Scholar
  24. Kroch, A., & Sjoblam, K. (1994). Schooling as human capital or signal: Some evidence. Journal of Human Resources, 29(1), 156–180.Google Scholar
  25. Layard, R., & Psacharopoulous, G. (1974). The screening hypothesis and the returns to education. Journal of Political Economy, 82(5), 985–998.Google Scholar
  26. Li, F., & Ding, X. (2005). Investigating job matching status to test the screen hypothesis: An application of the wiles test in Chinese graduate labor market. Peking University Education Review, 4, 50–54.Google Scholar
  27. Li, F., Morgan, W., & Chen, X. (2008). The effects of absolute years and relative rankings of schooling on earnings in China: The test for productive function and informational function of education. Chinese Journal of Population Science, 1, 67–73.Google Scholar
  28. Li, Z., & Tan, Z. (2011). The analysis of graduate employment under the function of human capital and social capital. Modern University Education, 2, 38–43.Google Scholar
  29. Liu, X., & Morley, G. (2013). Credential effects and the returns to education. Labour: Review of Labour Economics and Industrial Relations, 27(2), 225–248.Google Scholar
  30. Liu, Z. (2015). Long-term change in returns to higher education in China: 1988–2007. Peking University Education Review, 13(4), 65–81.Google Scholar
  31. Mary, S. (2008). Sheepskin effects in the returns to education. Applied Economics Letters, 15(3), 217–219.Google Scholar
  32. Mora, J., & Muro, J. (2008). Sheepskin effects by cohorts in Colombia. International Journal of Manpower, 29(2), 111–121.Google Scholar
  33. Olneck, M. (1977). The effects of education. In C. Christopher Jencks et al. (Eds.), Who gets ahead? The determinants of economic success in America. New York: Basic Books.Google Scholar
  34. Oosterbeek, H. (1992). Study duration and earnings: A test in relation to the human capital versus screening debate. Economics Letter, 40(2), 223–228.Google Scholar
  35. Pons, E. (2006). Diploma effects by gender in the Spanish labour market. Labour, 20(1), 139–157.Google Scholar
  36. Pons, E., & Blanco, M. (2005). Sheepskin effects in the Spanish labour market: A public-private sector analysis. Education Economics, 13(3), 331–347.Google Scholar
  37. Riddell, C. W. (2008). Understanding ‘sheepskin effects’ in the returns to education: The role of cognitive skills. Canada: Department of Economics, University of Toronto.Google Scholar
  38. Riley, G. (1979). Testing the educational screening hypothesis. Journal of Political Economy, 87(5), 227–252.Google Scholar
  39. Schultz, W. (1961). Investment in human capital. American Economic Review, 51(1), 1–17.Google Scholar
  40. Shabbir, T. (2013). Sheepskin effects of investment in schooling: Do they signal family background? case of Pakistan. Pakistan Journal of Commerce & Social Sciences, 7(1), 43–57.Google Scholar
  41. Shabbir, T., & Ashraf, J. (2011). Interpreting sheepskin effects of investment in schooling. Pakistan Journal of Commerce and Social Sciences, 5(2), 202–215.Google Scholar
  42. Shen, H., & Zhang, Q. (2015a). Quantitative analysis of diploma effects of personal return of education: Evidence from China. Education & Economy, 1, 29–36.Google Scholar
  43. Shen, H., & Zhang, Q. (2015b). Diploma effects under the interaction between labor market segmentation and family capital. Educational Research, 36(8), 22–32.Google Scholar
  44. Spence, M. (1973). Job market signaling. Quarterly Journal of Economics, 87(3), 355–374.Google Scholar
  45. Su, L., & Meng, D. (2013). Strong ties or weak ties: The using of college graduates’ social capital in employment. Journal of Huazhong Normal University, 52(5), 155–162.Google Scholar
  46. Trostel, P., Walker, I., & Wooley, P. (2002). Estimates of the economic returns to schooling for 28 countries. Labour Economics, 9(1), 1–16.Google Scholar
  47. Wang, J., & Liu, Z. (2015). Education: Promoting the human capital or Signaling? Education & Economy, 6(4), 30–37.Google Scholar
  48. Wen, D. (2005). The impacts of SES on higher education opportunity and graduate employment in China. Peking University Education Review, 3, 58–63.Google Scholar
  49. Wooldridge, M. (2002). Econometric analysis of cross section and panel data. Cambridge: MIT Press.Google Scholar
  50. Wu, Y., & Wang, X. (2009). Occupational gender segregation and gender wage gap in urban China. Sociological Studies, 4, 88–111.Google Scholar
  51. Zhang, J., Zhao, Y., Park, A., & Song, X. (2005). Economic returns to schooling in urban china, 1988 to 2001. Journal of Comparative Economics, 33(4), 730–752.Google Scholar
  52. Zhang, Q. (2017). Is the signaling value of education higher in the public sector? an empirical study based on the sheepskin effects method. Education & Economy, 5, 27–36.Google Scholar
  53. Zhang, X., & Lin, D. (2014). Gender disparities between income and rate of return to education of migrant workers. Peking University Education Review, 12(3), 121–140.Google Scholar

Copyright information

© Education Research Institute, Seoul National University, Seoul, Korea 2019

Authors and Affiliations

  1. 1.School of EducationHuazhong University of Science & TechnologyWuhanChina
  2. 2.School of English EducationGuangdong University of Foreign StudiesGuangzhouChina

Personalised recommendations