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Access to Elite Education, Wage Premium, and Social Mobility: The Truth and Illusion of China's College Entrance Exam

Aug 2016
SCID Working Paper
577
By  Ruixue Jia, Hongbin Li
This paper studies the returns to elite education and their implications on elite formation and social mobility, exploiting an open elite education recruitment system: China's college entrance exam. We conduct annual national surveys of around 40,000 college graduates during 2010-2015 to collect their performance at the entrance exam, job outcomes, and other individual characteristics. Exploiting a discontinuity in the probability of attending elite universities around the cuto scores, we find a sizable wage premium of elite education. However, access to elite education does not promise one's entry into the elite class (measured by occupation, industry and other non-wage benets) but parents' elite status does. Access to elite education also does not alter the intergenerational link between parents' status and children's status. The wage premium appears more consistent with the signaling mechanism of elite education than the role of human capital or social networks.