RETURNS TO EDUCATION UNDER COLLECTIVE AND HOUSEHOLD FARMING IN CHINA

This paper presents a theoretical model and shows that greater distrib utional equality decreases individuals' returns to education. The evid ence from a production team in 1977 and the rural household farming in 1990, both in China, lends support for the model. Production team did not reward most members' (especially for those with higher work point s such as the married and males) education during most of their lifeti mes in distributing work points and labor income. However, under the h ousehold farming system, a household's average or highest educational level increased its net agricultural income and total efficiency labor for all households at any average/highest educational and age levels. Thus our findings support the idea that reaping returns from schoolin g investments requires appropriate economic/political environments. (C ) 1998 Elsevier Science B.V. All rights reserved.