This chapter estimates the economic returns to schooling in urban China.
To do so, we use a unique matched employer-employee data set from Shanghai
collected by the Chinese Academy of Social Sciences in 2007. The ordinary least
squares estimates suggest that the returns to an additional year of schooling are in the
range 6.9–7.4 %. The inclusion of fi rm characteristics and ownership categories do
not affect the coeffi cient on schooling, but the inclusion of industry categories reduce
the coeffi cient on schooling by 0.5 %. Consistent with most of the extant literature,
we also fi nd that the returns to an additional year of schooling for females (8.5–9 %)
are higher than the returns to an additional year of schooling for males (6.4–6.7 %).