Treat “work now or keep studying” as one calculation: three years of wages from going to work first, against the yearly income gap over the following decades that further study buys
Go to work first and you earn a few years of wages early, but you collect that money only once. Keep studying and you earn a bit more than you otherwise would every year, for thirty or forty years in a row. So put the two sums side by side. In urban China, each extra year of schooling raises annual income by roughly 4.0% to 10.2%, but these figures date from 2001 or earlier, so treat them only as a rough guide.
There is no monetary cost. Setting aside about half an hou…
This estimate applies to Chinese urban areas between 1988 and 2001. The percentage increase in income linked t…
There is no monetary cost. Setting aside about half an hour to do the math is all it takes.
This estimate applies to Chinese urban areas between 1988 and 2001. The percentage increase in income linked to one extra year of schooling is known as the return on education. The original text notes that this rate rose sharply from 4.0% per year in 1988 to 10.2% in 2001, especially after 1992. It reflects the growing wage premium enjoyed by university graduates compared with those without higher education. This figure offers a locally relevant benchmark for converting “one extra year of study” into an annual income difference. For a global average, see Item 7 of this chapter (global average return on an extra year of schooling).
Zhang J, Zhao Y, Park A, Song X (2005). Economic returns to schooling in urban China, 1988 to 2001. Journal of Comparative Economics, 33(4), 730-752. https://doi.org/10.1016/j.jce.2005.05.008
Open source linkBefore you run the sum, first take off the tuition waivers and grants in item 4 of this section (vocational-school tuition and grants). There is also the account in item 2 of this section (one more year of education and mortality). The data stop at 2001 and cover only urban areas. They cannot be used directly as today's figures. The same is true of the global average of 9% in item 7 of this section. What is given here is a method, not an answer: run this way, the conclusion differs from person to person. Where tuition is high, the subject does not match the job, and the years of study are long, the sum may really come out not worth it. That only shows that this particular course is not worth it. It does not show that schooling is useless. A few things do not fit in the formula but do exist: legal education thresholds, in item 5 of this section (linked admission and separate exams in vocational education); resistance to being replaced, in item 10 (pick skills that resist automation); and whether you can change industry. The beneficiary is you