Public ownership has been theoretically justified as segmentation in the labour market,
which may depress wage and maintain a low return to education. However, lot of
evidence in 1990s demonstrates the variance of returns to education in public and
private ownership. Through the data in 2002, we also testify that having been laid-off or
xiagang reduces the value of human capital among reemployed workers, which only
accounted for a little proportion of millions retrenched workers. When those who had
different quality of human capital or being influenced by the planning economy were
forced to quite the labour market, the common view of higher returns in a transitional
economy will be carried out. Another outcome was the new entrants would enjoyed
more recourses in the terms of high returns to their education but the laid-off workers
only had a miserable life.