Rural Nonfarm Labor Education Yields Change

Education is an important form of human capital investment and has a decisive impact on the personal income and improving the quality of the people. The returns on education reflect the impact of education to income level. Rational residents increase investment in education only when they obtain appropriate benefits in the early investment. The returns on education can not only reflect the efficiency of the allocation of investment in education, but also measure the impact of education on gap of income level. Especially in rural areas, residents generally have a low level of education due to long-term economic poverty and large population. With the rapid development of rural economy, education level of the residents is gradually improving; individuals have more opportunities engaging in non-agricultural work and increase personal income levels significantly. The analysis of returns on education of rural residents can help to understand changes in yield trends and characteristics and provide reasonable recommendations on how to increase the returns on education in new period for residents in rural areas. The last aim is improving the income of rural residents and maintaining the healthy development of the national economy.Utilizing the1996, 1999, 2003 and 2005 "China National Nutrition and Health" rural survey data, the thesis aims to calculate the 1996-2005 non-farm rural residents returns of education based on summaries of previous calculation method of returns on education and a two-stage Heckman correction method to correct the sample data that may exist selectivity problems. The results of this study show that from 1996 to 2003 the returns on education of China's rural residents engaged in non-farm work gradually increased, but the conclusion is low compared to the results of other literature. The conclusion also suggests that the returns on education decline from 2003 to 2005. Adding the control variables such as gender, region, type of education and occupational characteristics, the conclusion shows that returns on education of male residents is lower than returns on education of female who have non-farm jobs. The return on education of rural residents in western region was highest, followed by eastern, minimum central region. The rate of returns of vocational education is higher than the rate of returns of general education in rural areas. Occupational characteristics can significantly affect the returns on education. Dropping the impact effect of occupational characteristics, the net returns on education of rural residents engaged in non-agricultural decreased obviously. Further studies showed that rising education costs and slow growth in real income are main reasons that led to the returns on education of rural non-farm labor decreased after 2003.The thesis suggests that a policy should put into practice to improve the education time of residents, especially female in rural areas. After the realization of rural compulsory education, secondary education becomes a key educational choice for the rural residents. Government should promote the development of vocational education in rural areas. Finally, government ought to promote the economic development of the central region, increase investment in education in rural areas in central and strive to improve returns on education in rural areas of the central.