Cohort Crowding in Education and Employment : Evidence from China’s Compulsory Education Law

This study investigates the effect of cohort crowding on educational attainment and labor market performance by employing discontinuities in schooling cohort size induced by China’s Compulsory Education Law. Similar to other developing countries, China is faced with education supply constraints even in the compulsory education stage. We find a negative crowding effect on completed years of schooling. Heterogeneity analysis shows a more substantial effect in provinces with poor resource indicators and in rural areas. We also show a negative crowding effect on the employment rate of poorly-educated people. Our findings highlight the importance of smoothing cohort size in schooling, especially among disadvantaged groups