Rising Inequality amid Rapid College Expansion: A Cross-sectional Time-series Test of Three Hypotheses

• In Event: 525 - Regular Session. Inequality and Diversity in Higher Education

Abstract

Socioeconomic inequality of educational opportunity (IEO) in China has increased manyfold amid the explosive expansion of higher education since 1999. Applying Alon’s (2009) theoretical model of IEO, we examine three possible causes of class competition: industrialization, educational expansion, and labor market incentives. The industrialization hypothesis emphasizes the shift of preference for more education arising from industrialization. The educational expansion hypothesis underscores the rising peer competition and decreasing positional value of educational credential arising from expansion of upper secondary and college education. The market incentive hypothesis stresses the balance of labor market supply and demand (reflected in the college earnings premium). Drawing on the 2006 Chinese General Social Survey and macro statistics on 405 province-by-year units, we obtain five central findings: (1) Both the industrialization and expansion hypotheses fail to account for the rising inequality. In fact, even the apparent effects of industrialization and expansion on college attendance vanish once we adjust for college earnings premium. (2) All predictions of the labor market incentive hypothesis are confirmed. (3) Class-differentiated family investments in education endogenously widen the class divide in college admission. (4) Rising market incentives intensify class competition by the time when students complete compulsory education. (5) The results also show that higher earnings premium would depress the chance of college attendance for students of the least educated parents despite the unprecedented expansion of college education.

Authors

• Tony Tam, Chinese University of Hong Kong

• Jin Jiang, The Chinese University of Hong Kong