Higher educational type and major area: which is the more important indicator of earnings in mainland China?

Abstract

Using data from Chinese General Social Survey (CGSS) 2018 which contain comprehensive information of the highly educated in mainland China, this paper estimates which of the two variables, type of tertiary education and major fields, is of greater importance to private earnings. With adoption of Ordinary Least Square (OLS) and Shapley Variance Decomposition based on R-squared, empirical results reveal considerable heterogeneity in returns to educational type (vocational college and academic university) and to major area. The former one is the more significant determinant of labor market outcomes and higher vocational qualification holders face a huge wage penalty. What’s more, the two factors show different patterns between genders: educational type matters more to women, whereas both are approximate of equal importance to men.