The following is part of Cornell Contemporary China Initiative lecture series
under the Cornell East Asia Program. The arguments and viewpoints of this
talk belong solely to the speaker. We hope you enjoy.
Uh so today we have Ruixue Jia come to speak to us from San Diego,
where she's been since 2013, uh but before that she was in Stockholm where she did her PhD
in, and I have to read this too because it's long to remember, in the Institute
for International Economic Studies at Stockholm University, uh and your department now in San
Diego is the Global Policy and Strategy, GPS, newly named. Uh so we're very happy to have her
here from all these uh disparate places to speak to us about some very important things
in China uh very interesting mix of economics and social issues, so my hand it to you.
Thank you uh thanks a lot uh so this is a based on mainly a joint work with Hongbin Li from Tsinghua,
so you see his name there. Let's before talking about China and the exam, I want to
share with you a broad motivation, why we started thinking about this project,
Access to education, especially elite education, is believed to be super important
for elite formation and social mobility across all societies in modern societies,
You may know the sociological works by Pierre Bourdieu, for example,
and I will not talk about that literature, instead of more, talk more about economics. So
in economics, there's also burgeoning literature, trying to estimate the returns to elite education.
For example, if you attended university, Cornell university how much more would you earn after
graduation compared to attending a non-elite or non-Ivy League university? Surprisingly or not,
there's no conclusion on this, and many studies find actually you don't necessarily earn more, why
there's no, why there's controversy, conversation about this topic, you, you would think, oh it may
be easier just compare the graduate students here with another set of graduate students from a less
good university. Let's look at their salaries and we get the conclusion, but that's not easy. As
you see, uh you know, your, you can come to Cornell because you are much able than other universities,
or your family background might be very different that students from non-elite universities, so
in the end when you go to the job market even if you earn more it's not necessarily because
of Cornell, it could be because of your own ability or because your family background
so that's a typical challenge known as the selection, and that's, you know, makes it
difficult to reach a conclusion about whether attending elite university really helps or not
and this literature also didn't talk much about elite formation, social mobility.
So in this project, we try to first also estimate the returns to elite education,
but we also want to speak to social mobility and elite formation in China. In addition, we want to
shed some light to understand the mechanism. If we find a wage premium, where does it come from,
and why China, of course? My reason is: I'm Chinese. I care about China, and many of you
may care about China; that's why you are here. But there are even, if you you know don't care
about China, a Chinese case is very interesting to study intellectually because uh this Chinese
ideal laboratory to understand the rule of elite education. As you may know, each year,
around 10 million students are taking this college entrance exam. This is likely to be the largest
standardized exam in the world, and this exam score will determine whether a young person can
attend a university, and which tier of university, so it's really important for this million,
10 million of students each year, and they exist cut-offs for different tiers of university,
so if you are just, for the first tier, the elite university, if you're above the cut-off,
you're eligible to apply, if not you you're not eligible. When social scientists hear about this
they get excited. You seem not very excited, but this, because, why this is so exciting because now
you can compare relatively similar students, you know, before I talk, I said it's very
difficult to compare students in Cornell with the non-Ivy League university students, but now you
can compare relatively similar students, it just someone are just a few points above the cut off,
some are just few points below the cutoff. Now let's look at which university they went to,
and let's follow them, see whether they're someone who, uh whether there's difference in which when
they go to the labor market. And in addition to this general motivation, the exam system may be
one of the most important institutions in China, as many of you may know. It's often perceived to
be, you know, the only most important channel for Communists to become elite in the society.
I will focus on economic consequence in this talk, but this exam system also has other interesting
social, cultural, political consequence. If you actually if you are interested in
the political consequence you can read a great paper, I was joking, written by my co-author and I
last year, look at a historical version of the exam, and how that affects political stability
of Chinese dynasties, but I wouldn't talk about this in this talk. I'll talk about
the modern college entrance exam and the economic consequences. Just to show you some picture, uh,
you know you can easily, if you type the exam called gao kao (高考) in Chinese in Google,
you'll find many many impressive pictures online. Uh the first pictures, I select a few for you,
the first one is just like how my classroom looked like when I was in high school. You know,
people are just heading down, practicing the the exercises for the exam, they don't have time to
ask questions. So that's one, I always think that's one reason why Chinese students
are not great at asking questions, even when they come to the U.S., so I'm very happy I'm
on this side speaking instead of sitting there thinking about oh what questions should I ask,
so don't worry if you do not have many questions later. And the second picture uh is a
not only the students are clearly working hard, their parents are invest a lot,
and when they were like writing on the exam during like the two days in June, their parents are
waiting equally anxiously outside. You know, my father was doing that when I was taking the exam.
And the schools also came up all type interesting slogans trying to encourage their students to work
hard, and here's one popular one, said: oh without the exam, how could you compete with the second
generation of the rich, you know. This this is because people some students complain that it
is so harsh to work for the exam but the rationale is, without it how could you
compete in this society, because the children of the rich has so much, so many advantages.
But now, why do we, I can stop here and let you go. Oh this is very important, the students are
work hard in, parents are invest a lot, then of course on the labor market there should be some
consequence and we can stop and you can go home, but this is not without controversy, because this
in, this China, as you know family background is also believed to be crucial in the labor market,
and there was even phrase, ironical phrase called: to each according to his dead. You know,
Marxism has this to each according to his need. Then this is ironically say, oh in the end,
it's to each the distribution of the societies according to your debt, so if this is right,
then this upper mobility, upward mobility provided by the exam might be just an illusion rather than
reality. So that's why we want to collect systematic data and doing careful analysis
to better understand the general pattern, and if we find something, we also want to understand the
mechanism behind the pattern. So I just give you a preview about what we find so far, uh then you can
you know think about your Halloween party while I go to the details. So the first is, you know,
that's scoring the part, the elite university cut-off, make one more likely to go to university.
If you think, you know, China is super corrupt, maybe the education system is also very corrupt,
even there are some cutoffs, it doesn't matter in the end. But the answer is,
yes it matters a lot, you know, scoring above the cut-off increase the probability a lot
of going to elite university. And the second, the question is, or, does elite education lead to a
high wage. The answer is yes, and they decide, it's the effective size of what I'll show you,
and then you if you earn a high wage due to elite education, does that mean that you become elite
in the society? Our answer is unclear. I will be more concrete about this later,
so while we find a wage premium, we don't find much in other important dimension that's
important for being an elite in this society such as perks, such as whether you can working
for the government, whether you can work for the banking industry, etc. I'll be more uh clear later
uh and we also want to know that's going to, the in terms of intergenerational mobility, like,
that's going to, go into elite university or scoring the culture above the cut off,
changing the intergenerational mobility. In other words, does that change how your parental status
affect your own status? And our answer is: no. This might be surprising, but we find no
change in inter-generational mobility. I'll be clear later about what we find. Finally, we want
to understand what leads to the wage premium. Is that you learn more in an elite university
like Cornell, or you actually get to know more people so that you have a better job or that,
this is purely a signaling channel, you don't necessarily learn more, have more human capital
than other students in a non-elite university, but you still get high wage because there's strong
signaling, you have an elite education, that's very important. And what we find surprising or
not is more evidence for signaling than human capital or social networks. And you know,
you might have some questions and we can discuss later. So I will now come to the details,
uh I will first briefly introduce some background of the how elite education works in China, and
tells you how we collect this data. And then I'll go to the questions and our answers step by step.
So all tier, first, all tiers of Chinese universities, all the university in China,
recruit based on the exam system, and what we call elite university in this project is the first
tier. And they recruit first after the exam. They thee are about around, about 2,300 universities
in China among the (unintelligible) study period only 96 count as the first tier across all provinces,
and this definition is very closely related to this Project 211, I'm not sure whether
you heard about it, but this is a pro-, this is a designated 100 universities for the 21st century,
but these are another category of elite universities they heavily overlapped with
what we call elite university in this project. And just for your information, all elite university in
China are public, not not like Cornell, I guess, and they are not so small they're more like UC,
University of California type of university and they don't charge higher tuition fees than private
universities, and the yearly tuition fee is about 5000 RMB, so it's about 800 dollars. Not too high,
right, 800 dollars. Uh and what makes elite university special is they have more resources
and the government uh government support, and they attract very different uh students. Uh and
there's an interesting feature, I'll come back to this after telling you all those findings,
the education system in China is is very well known for strict interest and easy out. So you
have it has this very strict exam to select students, but once you are in almost everyone
are promised to graduate to graduate. So that might affect, you know, the mechanism of wage
premium you'll find later. So so you know if you go to elite university, or non-elite university,
the graduate race, ratio, or rate is very similar. Uh so how would this do, how does university
admit students? So just give you a rough picture, before most provinces
the process works as follows. First everyone takes the the exam, and the exam was graded by
province, so the score are only comparable within the province, and after seeing the scores
the government will decide the cutoff for the elite university, and the cutoff would be public,
public everyone knows this, and the students know their scores, and they know the cutoff, they fill
in the application, including the university and the majors, and if you are above the cut off,
the first tier cutoff, you are eligible to apply for these elite universities, but you are not,
this is not sufficient, you are not, for example, if you are you like 20 points above the cutoff,
you apply to Tsinghua, which is the top elite university, you are very less likely to get
into because many people apply in to Tsinghua, so there's computation in the end, uh whether
you know the minimum score for each university is different, depending on the computation.
So the cutoff determines the eligibility, but it's not sufficient, just to be clear.
And then after receiving these applications, the university decides whom to accept. So just
how the scores are the look like, so in this period most provinces use a scale of 750 points,
so they're based on four projects, there are two tracks: one is called the natural science track,
the other is social science track, and they are testing different subjects. I, I wouldn't read it,
but roughly like based on four subjects and together the maximum score is 750 points.
And I just want to be clear about the background. If you are below the cutoff,
you have a very low probability, not zero, but low probability. You can still apply if you have some
extra scores, for example, these extra scores are typically because you're a minority, or you
your father died for the country, or you get some international prize from math uh physics type of
competition, you have got some extra score, so even if your original score is below the cutoff,
with extra score you can become eligible, but the probability is generally very low
and if you are above the cutoff, yes you can apply now, but as I said, before it's
not that 100 sure you're getting to the at the university you apply, you could be rejected,
and didn't get get into any university. This is the background now, come to the data, like
I said and the social scientists are very excited about this, they should have already done this,
why wouldn't, why would no one has done this, this is because there's no data on this. Individuals do
know their own score but there's no systematic score available for large group of individual,
even you get that it's very difficult to link the scores to the labor market outcome,
so to do this one has to collect data myself. So what we do is we have been collecting this data
for six years by surveying the graduating cohort in May and June during 2010 and 2015. So as you may
know, students would already, they would have to leave their school or their college in July by May
and June, they already know what they would do for the future, right, some a small share would go to
graduate school, but the majority of them already searched for job, and then the majority of them
have already got job offers, and that's what we get about their job outcomes. And of course this
is the first job. What I show you, the main result of the first job but I'll show you some additional
(unintelligible) time additional data telling you that the first job is very important for your future
jobs too, and this might be useful for you since you have not searched for a job yet, I guess,
so actually yesterday I was in a conference on inequality in the U.S. People using detailed
data in this country showing that the inequality within a cohort, so with, when the graduating
cohort in lifetime income is already determined at age 20- 25 so basically your first job is
super important in determining your lifetime income. And this is also the case in China,
I wouldn't have time to tell you how how we implemented these surveys step by step,
but one interesting thing is we have very high response rate. This is because we not really give
the survey questionnaires by individuals, instead we selected all the individuals by some random
sample method and then we gathered all of them in this such a big classroom, and they fill all the
questionnaires by the same day, the same time, the same place that increase the response rate.
So for, for these six years we've managed to survey exactly 90 universities in China. Among
them, 26 belong to the amount of of the elite university group. We deliberately oversampled
the elite university so that we can have enough students to compare. So in these six years,
we collected information for about 4,000, 40,000 uh students in the in their graduating year,
so the first map, just to show you where the ninety universities were located, were located,
there as you see they're widely spread across 26 provinces in China, and if you look at where their
students come from, they come from all over China, you know, we don't have like university in Tibet,
but you know we still have students from Tibet in other provinces, so we have about 40,000 students
but before today's talk I will focus on about 10,000 students of them who have scores just
within 20 points, around the cut-off. If you recall, that the maximum score is 750 points,
so 20 points you know it's not that that large, so people are relatively comparable,
and so we'll compare students all of them are within 20 points around the cut-off.
So now I come to the first set result to show you that how the exam scores affect access to
elite education, and also show you a little bit about how this affects other dimensions,
like what major they would be majoring, where they study, and their rank in college. So the first uh
figure, the x-axis is is the point to the cutoff, so each dot indicate or on one point,
not um a group of students are one point below, uh or five points below the cutoff or five points
above the cutoff. The y axis plots the average probability of attending an elite university,
so what you see is, this is zero here, it's there's very small probability that one can
go to elite university if they are below the cutoff. But you see this very clear
jump after one is above the cutoff, and this is the increase as you're getting high scores.
And this is, you know, clearly show this significant change if you're above the cutoff,
you're much more likely to attend an elite university, as I said, because why do I put it
here because the scores are only comparable within province, year, and track. There are two tracks,
so sometimes you want to isolate these facts to just compare students within the province year and
track. So I only compare students within Beijing, just one student in Beijing with another student
in Beijing. I'm not to compare a student in Beijing with a student in Shandong, for example.
And you see, now after considering this, you see a similar pattern. So in terms of magnitude, if you
are scoring above the cut off, the probability, you, the probability of getting elite,
into elite university would be increased by 0.15 but this is about, over 70 percent of the mean.
So your probability of going to elite university increases by 70 percent, and this is pretty large.
And and you would wonder, you know, I will tell you that one, why we want to use this
kind of design is to to make sure that the students around the cutoff are comparable,
right, so we want to check just to show you, you know, if you look at their well their gender,
their age, whether they have rural or urban, or their family income, you'll find that they're
similar, there's no similar diff- like this jump in these figures like implying
that they're fairly comparable. If you don't do this way, if you just look at all the students
then you'll also see them seem like discontinue you'll see a jump because students are being elite
university, or have high scores that typically also have high, from high income families,
etc. And this way, we can make sure that these students are comparable. I want to mention that,
it's not a, scoring about the cut off not only changes whether you go to an elite university,
it also changes your major, and it changes where you go to, uh you know, where you study,
and it changes your ranking in college. So how, why this, uh how does this work? So uh
if you think about this, if you are just above the cutoff, right, you are lucky about the cutoff,
but you are the worst in this eligible group. All the other students uh have higher score than you,
right. Is this clear? Uh so you are worse so you are actually less likely to go to a good major,
like in this period, economics, finance and the law are the more popular major. You're not,
you're less likely to be able to enroll in such popular major because, among those are eligible
for elite university, you are the worst. Uh whereas if you are in a non-elite group, even
though you are not eligible to elite university, among compared with your peers, you are the best.
So there's an interesting reversal pattern here, and this is what we find if you look at the
probability, this is the same, like score point by point relative to the cutoff, if you look at
the probability of enrolling uh econ management or law, you'll see actually there's, if you are
above the cutoff, you are slightly less likely to maintain these popular major affairs. And this is
can be explained by a slightly increasing STEM and slightly increase in humanity.
And if you look at where the university located, they're more likely to be outside the home
province, because all this elite university typically including be in provinces far away
from the home province, so they're also more likely to study outside their home province,
and as I said, they are relatively worse within the eligible group. This could be
reflected by their ranking in college, so in the survey we asked how do you think about
your rank in your class, like do you think you belong to 20 percent, top twenty percent
or bottom 20 percent? What's interesting is, there's a very interesting bias. For example,
only like only 5 percent of students claim that they are bottom 20. This doesn't like you know
makes sense, right? But that's our bias and over 40 percent of students claim they are
top 20. So, we are always overconfident, right; we are less likely to think we are like the bottom;
we're more likely to think we're at the top. But despite this, you know, interesting bias,
you'll see that if you are above the cutoff, you are more, less likely to see you are on the top;
you're more likely to see you are bottom. All this just to to paint to the picture that,
yes, these people are eligible to elite university if they're above the cutoff,
but they also have some disadvantage in major and maybe college ranking, or this might affect
their labor market outcome, too, and we need to consider this when we come to the wage part.
Now I'll come to the wage part, uh I will first show you you know how this affects your wage, you
know, the first job wage and I'll need to tell you a little bit about how major and other dimensions
affect these findings, and what's the implication on elite status for the students and how important
the first job for your future jobs. Just, before showing the wage, I want to, you know, as you can
imagine, not everyone started looking for a job, right; some of them would go to graduate school,
so average 74 percent searched for a job. Among those searched for a job, 74 got offered, this
is not typo, it just happened to be the case. And so, so I told you in the first part,
about ten thousand students, we look at in terms of uh entering- entry uh
into college, and now we are looking at the wage part; we only have half of these students
really have wage information. And just for your information, those above the cutoff are
slightly less likely to look for jobs, as you can imagine. If you go to elite university, you
might have other options, et cetera, that affects the probability, but the difference is not huge.
So if you look at the wage, you you can look at this- the similar graph point by point, uh and
this is a the better way of looking at that. The y-axis now is the log wage if you think about
the difference between the, the at- the right hand side and the left-hand side and the right-hand
side, you can think of the percentage change in wage level. So if you look at the difference
between these two, you can't see clearly, so you have to trust me. It's about six percent, so the
wage difference would be about six percent. If you are just above the cut off, your your monthly
wages increased by six percent. And this is not, no this is about means, about uh 160 RMB is about
25, 26 US dollars, maybe not huge but if you look at wage premium, you have to divide it- if- this
wage difference by the probability increased the probability of going to elite university
increased by being above the cutoff. And this would give us an estimate about 40 percent,
so- which is pretty large. It means that elite education has a wage premium about 40 percent,
that about 1000 RMB in a month. In this period, I forgot to see if the monthly wage for these fresh
graduates is about 2500 RMB. So 1000 basically is about 40 percent of the monthly increase. So
roughly, you can think going to a elite university at the median wage which would be about 3,500.
There's no good like very well identified wage premium for college students in China, either,
but we can compare with them. If you look at other contests, uh like in the U.S.,
some estimate is zero, so the elite university like the Kruger-Dale study there's no
elite education wage premium. There's one study in Italy compared students who could just go to
Bocconi versus other university and they had a estimate of 45 percent,
but it's difficult to compare across countries. I haven't considered the major or like location of
university or your ranking class, how that affects your wage premium, but as you can already imagine,
this major and the ranking all have a disadvantage, right, as I said,
you are the worst basically if you are above the cut off your worst among the eligible group.
And if you include them that only makes your weight premium slightly larger.
If you compare, so as I said before now, you have, if you have above the cut off,
you're more eligible, you're more likely to go to university go to elite university,
but you're less likely to go to, to major in a popular field. So if you consider that,
uh take care of that, you'll find actually the wage premium or elite education slightly higher,
from six, to include, to be seven percent, for example,
uh and now come, you know, you, I show you that yes elite education now has some wage premium,
however, does that mean that a young person now become elite in this society? If you know
about this country, you would say, oh I don't know, because many elite dimensions are not,
cannot be captured by the wage premium. For example, you know, maybe going to a
banking industry, finding a job in SOE or have a hu kou (户口) in Beijing or Shanghai,
these are typically also very important for elite status. Does going to elite university change all
these dimensions? That's what we all want to answer. Uh so we examine like three dimensions
to shed light on this question. First, we have to, we look at how the job, which job characteristics
explain the wage premium. Is that to be explained by your occupation industry, or ownership? Or is
actually explained by something like within the indiv- within the industry occupation? So you're
still working in the same occupation, but you have different wage. We also define elite occupation
industry and ownership in an interesting way, I think. So in the data we ask people:
what is their ideal occupation industry? We know they real-life industry and occupation, right,
we know their ideal industry and occupation, then this gives us some ratio. If an industry like
banking, most people hope to work in, but very few can realize this job, then this is likely
to be an elite occupation similarly for industry and the ownership. So this gives us some measure
of eliteness of their job, and finally we also check some non-wage benefits like whether they
get houses subsidy, whether they have like all types of insurance. Uh in the end, we don't find,
or in all this dimension, we don't find evidence that this means the the
people with elite education or also enter the elite club. So don't worry about the tables,
if we do, if we check which job characteristics explain the wage premium, in the end we find is
not explained by their occupation or industry. It's actually explained by some variation within
occupation industry, so you are not necessarily more likely to work for the bank industry, or more
likely to work for the government. It's within the same industry, you earn a higher wage. So if we
define industry or occupation uh by this ratio, I mentioned it to you, maybe this, uh this is
a bit interesting, uh so for example, giving like, managed person, management personnel or being a
leader in a firm or in the government, uh is a occupation, you know, you typically think this
as in like elite occupation, we can also measure this with data. For example only one percent of,
of people would realize a management personnel occupation, but if you look at how many people
hope to work as, in this occupation, it's 10 times high. So this ratio is only 0.1, meaning that only
one in 10 of people could realize their dream. But if you look at a skilled worker, or for example,
uh you'll find a ratio, of if you look at clerks, for example you'll find the ratio would be four,
so you know only, only 7 percent of people would like to work as a clerk, but 28 of people have 28%
had to work as a clerk in the end. So this gives us this (unintelligible)
elite status or occupation. Similarly we can look at uh industry or ownership,
and we don't find that this is affected by being above the cutoff or not. If we also look at other
dimensions like whether you have a like hukuo in Beijing or whether you get housed in subsidy
or whether you have better insurance, all these are not, we find no difference
between above the cutoff or below the cutoff. So all the message is, yes we find the wage premium,
but if you measure like elite status in other like typical sociology career, you wouldn't find that
being above the cutoff is enough for you to become an elite in the society.
I wouldn't go to the details but, but we don't we only have the first job in our survey,
right? By our design, we cannot follow these people in labor market,
uh and to get some sense to understand how important the first job is,
we downloaded like millions of series are from a major job recruitment site called dropping.com,
and there people have their CV and job history, and we look at the correlation of how the first
job affects their future job wages. And we find strong persistence. And this is also true
in the U.S., I guess. Your first job is very important determine your future job earnings.
So so the message is that even though we don't have future jobs for these individuals,
our findings is likely to matter for the future too. So come to the social mobility part, it might
be sounds a bit confusing if on the one hand yes, you know you earn a high wage, of course you have
a mobility now right because your wage rank is increased. But when people talk about social
mobility, there's another important dimension is this intergenerational mobility. As you,
we all know, there's always your father like your parents status and child your status is always
positively correlated there's always a positive line between parental status and income status,
where we won't earn the children's status. We want to know whether this slope changed by being above
or below the cutoff. This is what I mean. So just to give you two scenarios uh now each the red line
indicates those above the cutoffs and the blue line indicates those below the cutoff, and in the
first scenario, uh the this red line is flatter than the blue line, so I forgot to say, the x-axis
is the income rank of the parent and the y-axis is the income rank of the children, In every society
there's a positive slope. If your parents have a high rank, the children tend to have a high rank.
What's interesting here, we are interested in, if you above the cut off, if this rank become flatter
or steeper, it becomes flatter meaning that now the parental income becomes less important if you
are above the cutoff. This is called increased social mobility, intergenerational mobility.
And in the other case if you are above the cutoff, actually this line become even steeper,
so it's like the parental status becomes even more important. I think this is what Pierre Bourdieu
might talk about, you know, elite parents would have more elite kids, you know, around the elite
education. It's just a way for elite reproduction, uh and we need to see that exactly we don't know
which is likely to be true. It depends on your thinking about the society. If you think the
exam system is great, it levels leverage levels the play field, and the parental status should
become less important once they're above the cutoff. If you think oh in the end there's a
the rich kids should learn even more given the same education, you would likely to expect this is
the second case. And what we find in the data actually is neither the case. So that's why it's
interesting to see the data, uh because you know if you if this is so important, such important
institution in China, if you search online, you find scholars have all types of argument
and hypothesis. Some think or it's very good system especially for the poor, and something is
basically a illusion, it's cheating. In the end, it doesn't help the poor. So it's really important
to show the data and this is what we find. You basically see a parallel shift which means
being above the cutoff does neither increases nor decreases inter-generational link. There are few
messages here. First, you know, if you think uh the exam system attenuates parental status
parental income influence, then this is the illusion, this is too naive, uh this parental
status is still very important. One way to look at this is to think about if you are per case here,
for example, at the the 20 or 40, 20 to 40 percent income, 20 to 40 quantile income, and your,
if you're above the cutoff, right, you indeed have a higher wage rank. But if you compare with the
kid from the very rich, the top 20 percentile income families, and even he or she doesn't
pass the exam, his wage rank still higher. So now you so coming back whether can I compete with the
the second generation rich, now the answer is it depends on how rich the the second generation is.
If he is from the middle group, yes you can you can compete with him or her now. But if he is
very very rich family, you still cannot compete with her or him. But I want to be clear, this is
not too pessimistic. In many elite institutions, actually it's likely to be this case. You know,
if you go to elite university, if your parents are richer, you earn even more, right? So this
is more optimistic than this case, but more pessimistic than the level playing field argument.
Finally we want to understand what drives the wage premium.
Is that driven by human capital? You know, you earn more, you're more productive so you get
paid more. Or is that driven by social networks? You have, you know, you know better students,
father, your classmate's father has worked for the government, you get a better job. Or it's
actually a signaling. You do not necessarily learn more, but actually you'll still get a higher wage.
So this is very difficult to to pin down, so what I show you is some suggestive evidence,
and you know if there are very few studies trying to pin down each channel because it's
very difficult to measure any of them as you can imagine. What is human capital, for example?
so what we do is we which the typical matter of human capital is your performance in colleges,
and you want to ideally measure some tests that everyone takes across universities,
so that is comparable. So gpa is not great right, because every different university use different
ways of gpa diff- like given gpa, so it's not very comparable. So there's one measure that is
close to this idea or most student would pick, and they are standardized so you can compare
across universities. That is the National English Test every student, almost every student would
would take it, and the scores are standardized, and it's I think now graded by computer,
so it's comparable. And then we have different, many other measures, in terms of certificate or
exam performance in college, and we check whether there's difference for those above the cutoff and
below cutoff, and we don't find any difference. Also, we ask them how many hours they study in cl-
in college, and they don't study for for a lot, but if they study, they often study
English. So we also look at how they put their, you know, how their, how their efforts look like
for those above the cutoff and below the cutoff. And we find no evi- like no difference either.
So in all the measures of human capital, like majors, we cannot explain our finding either.
So in all these measures, we can measure, or we can have in terms of human capital,
we find no difference. So it's not that we want to reject this hypothesis, but we just have no
evidence that we perform better, or have more uh like more certificate to prove they're better.
And if we look at network, you know, if you think if you know a little bit China, about China,
you would think about this is about network, uh so what we do is, we look at how, we ask them
how you find your job, we also look at how your networks affect their wage. So when we come to
the job search part, people usually use different ways of search jobs like off-campus job fairs
or on-campus job fairs or job website or using networks and we don't find anything
that those above the cut-off are more likely to use evidence, uh use network. If anything, we
find they're more likely to use on-campus fairs, but that's a bit related to what Pang Le said.
Those elite universities also attract better employers, so they have on-campus fairs which
gives these people more opportunities to get good, better jobs, but this is not a network
channel, this is more likely to be a signaling channel in our understanding if the reputation
of the university matters in terms of attracting the employers. And if you look at the, how this
network affect, uh wage premium, so what, so to be sure, yes if you are above the cut-off,
you go to elite university, indeed you have better networks. For example, if you measure the share of
your classmate whose father has college degree, or whose father has a, is a party member, indeed the
probability is higher. So you know, if you're above the cut off, your classmate background
is better, that's for sure. We do find that in the data, but we found this cannot explain your wage
premium, so it's not explained by your part, your your government background. But there's one caveat
in these findings. We're looking at the first job, and this type of weak ties, you know, your your
classmates, your schoolmate's father's connection often matters in the long run. In the first job,
maybe it doesn't matter much, but in the long run, it can meant more, that well we cannot study that.
And another, another piece of evidence on signaling is suggestive, because it's very
difficult to measure signaling unless you are in a lab, you know. In the real world,
you don't really know how people send the signals. We ask them something about job discrimination,
what kind of discrimination they experience uh when they are on the job market,
like we ask like gender, uh appearance, (unintelligible), rural, etc. We don't find any any
difference in this dimension. There's only one uh dimension which is very sizeably different but not
precisely estimated, is that if you're above the cutoff you're less likely to see that
your, you are discriminated because of a university rank. This is almost mechanical, right,
because if you're above the culture of you are more likely to go to elite university and you're
less likely to think you'll be discriminated, or you are discriminated because of the university
rank. And, but this is all, this you know, if you think discrimination is a negative signaling,
then this is also more consistent with the signaling mechanism. So in this part, it's not
that we want to reject any hypothesis, we don't need and this could be a paper without this part,
what we want to just to know, we just, let's have try as many measures as possible and see which
is more consistent with the data. And in the end it's more consistent with the signaling mechanism,
and in reflection, in retrospect I wasn't very surprised. Initially I was a bit disappointed,
oh we don't find human capital in this, but now I kind of think, you know, you think about this
education institution, which is very strict in interest, but very relaxed exit,
so you know students don't have a lot of incentive to learn much. I don't
know whether you have studied in Chinese college whether you shared my feelings,
but they did they don't have much incentives to to to learn for graduation, for example.
Uh so yeah I can, I can stop here but feel free to ask questions. Thanks.