This study draws on a survey of urban Chinese workers in 2005 to estimate the
private returns to education and estimate the income elasticity of education.
Differences in the rates of return to schooling are examined between gender and
between age groups. The estimated returns to schooling are found to be higher than
those documented in existing studies for the mid 1980s to late 1990s. In particular,
considerably higher returns to education are observed among people aged 35 or under,
representing those who received standardized education and entered the labour market
during the urban economic reform era. The study finds that the income elasticity of
education expenditure is relatively low and that expenditure on education is less
sensitive to changes in income than expenditure on either food or clothing.