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 has 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 crowding effect in provinces with poor endowment and in rural areas. We also find a larger cohort size negatively affects the employment rate of poorly-educated people but has insignificant effects on people who have finished high school. Our findings highlight the importance of smoothing cohort size in school, especially among disadvantaged groups