This paper examines the emergence of labour markets in China through the lens of returns to rural education. It demonstrates that methodology plays an important role in explaining the low estimates of returns in previous studies. When wages are defined on an hourly basis and sample selectivity...

Previous studies have found that the returns to education in rural China are far lower than\r\nestimates for market economies. In this paper, we try to determine why previous estimates are\r\nso low. Whereas estimates for the early 1990s average 2.3 percent, we find an average return\r\nof 6.4...