This paper studies regional disparities of educational attainment in China. It
explores the causes of the regional inequality of the educational investment measured
by the enrolment rate at various school levels. It finds that the return to education,
the governmental support and the financial constraint play an important role in
generating differences in educational investment across regions. The empirical
analysis of the paper also identifies different impacts of the support for education at
different levels of government. Specifically, an increase of one standard deviation in
the support for education at the level of the central government will raise the
enrolment rates of the college, the senior high school and the primary school by 6.1,
7.0 and 7.5 percentage points, which is an increase of 140%, 32% and 9% compared
to the sample mean enrolment rate, respectively. Contrastingly, although the ratio of
the local government’s educational expenditure to the local GDP has a marginally
significant positive impact on the enrolment rate of the primary school, it has a
significant and negative effect on the enrolment rates of both the senior high school
and the junior high school.