CityReads│How Educated Are China's Labor Force
Using the Sixth Population Census data, we find that in 2010 only 24% of China’s entire labor force (individuals 25-64 years of age) had ever attended upper secondary school. This rate is less than one-third of the average upper secondary attainment rate in OECD countries.
Khor,N. ,Pang,L. , Liu,C. , Chang,F., Mo,D. Loyalka, P. and Rozelle, S. 2015. China's Looming Human Capital Crisis: Upper Secondary Educational Attainment Rates and the Middle Income Trap, Working Paper 280, REAP(Rural Education Action Program) at Standford University.
Source：https://reap.fsi.stanford.edu/sites/default/files/280_human_capital_paper.pdf
Cover Picture：http://pakmed.net/college/forum/?p=25855
Accumulation of human capital is indispensable to spur economic growth. Exactly how much human capital that entails is the subject of debate as a number of developing countries are making the transition from economies based on low-wage, labor-intensive manufacturing to economies based on high-wage, higher value-added industries. If developing countries fail to accumulate adequate levels of human capital during their economic transitions, they can fall into the so-called “middle-income trap.” This refers to the condition in which countries that have reached middle-income levels of GDP stagnate and fail to achieve high-income status. It is because they are unable to compete with developed countries in producing skill-, knowledge- and capital-intensive products and services. Economic advancement for middle income countries is therefore believed to be in large part dependent on human capital accumulation—generally approximated by measuring the average level of educational attainment of a country’s labor force.
So how is China doing in terms of this important, internationally-recognized metric of human capital accumulation? What seems like an easy question is actually the source of much confusion in China today. There are at least two sources of confusion.
First, there seems to be large discrepancies between official statistics on education in China and data from in-the-field academic studies. Formal publications of the Ministry of Education and the National Bureau of Statistics report that 86% of 15-17 year-old youth are enrolled in upper secondary school (MOE, 2013). At the same time, however, large-scale studies based on data collected during carefully planned and executed primary survey efforts suggest that only 37% of rural students graduate from upper secondary school. Since rural youth (15-17 years old) account for 72% of all youth in China in 2010, even if we optimistically assume that most urban students graduate from upper secondary school, this would mean that the share of China's 15-17 year olds that graduate from upper secondary school fall short of the officially reported statistics.
The second source of confusion arises when trying to interpret the discussions in the China education literature and draw comparison with the international literature. Researchers internationally have determined that the relevant measure of human capital development is the average level of educational attainment for the entire labor force. Yet in the recent discussion of the nature of the human capital in China’s economy the discussion is in terms of flows (or the share of a certain age cohort that is currently attending a certain level of education).
The overall goal of this paper is try to understand if China is ready in terms of the education of its labor force to progress from middle income to high income country status. Using data from China’s Sixth National Population Census, we seek to understand the share of the labor force that has attained at least some upper secondary schooling and examine these attainment rates separately by urban versus rural residence and younger versus older age cohorts. Then we benchmark the educational attainment rates of China’s labor force against the rates of the labor forces in other countries (OECD, G20, BRICs). Lastly, we explain why there seems to be such large discrepancies between official statistics and data from in-the-field, academic studies.
The data for constructing our measure of upper secondary attainment are displayed in Figure 1. The data are presented for each year in graphical form for all age cohorts in the 2010 Census. Reading vertically (from bottom to top) above each cohort’s age, one can see the share of all individuals (both urban and rural) of each age cohort that had. For example, among all 42-year-olds in China in 2010, 2% had no education at all; 24% had some primary education (but no secondary or tertiary education); 54% had some lower secondary education (but no upper secondary or tertiary education); 13% had some upper secondary education (but no tertiary education); and 7% had at least some tertiary education.
Figure 2 shows low rates of upper secondary attainment overall (across all ages of the labor force) in China today. For example, Figure 2 shows that in 2010 the share of 20-year-old individuals that had attained some upper secondary education and beyond was 51%.
We then estimate upper secondary attainment by: a.) first multiplying the upper secondary attainment rate of each cohort year by the population weight for that cohort year; and: b.) then taking the sum of these amounts across the 40 cohort years. In 2010 the share of China’s labor force that had attained at least some upper secondary school was 24 percent (or 187 million people). By contrast, 76 percent of the labor force in 2010 (578 million people) had never attended any upper secondary school.
Since China’s official retirement age (and therefore definition of “the labor force”) may differ from that of other countries, we check to see whether our results differ materially when the authors use alternative age cutoffs for the labor force. Authors find that changing the cutoffs for the labor force makes little difference in upper secondary attainment rates.
Dividing the share of the labor force that attained at least some upper secondary schooling into sub-cohorts by age demonstrates that the relatively low levels of upper secondary attainment in China are, in part, driven by the low levels of educational attainment among the older age cohorts (Table 1).
Examining the differences in upper secondary attainment between the urban and rural labor force reveals an even greater source of disparity. The share of the urban labor force that had attained upper secondary school in 2010 was 37% (Table 1). The upper secondary attainment rate of the rural labor force was only 8% (Table 1). This disparity can be seen even more dramatically in Figure 3. It suggests that the low rate of upper secondary attainment in China is largely driven by low rates of educational attainment among the rural labor force. So the rural working force is of critical importance to overall national human capital formation and, hence, economic development.
Using the report“Education at a Glance” (OECD, 2012), we compare our findings against levels of upper secondary educational attainment in other countries.
The share of China’s labor force that has attained at least some upper secondary school is extremely low relative to the OECD average in 2010 (Table 2). In particular, China’s upper secondary attainment rate (24%) is less than one-third of the OECD average (74%). The gap between China (24%) and the EU21 (75%) is similarly wide. China’s upper secondary attainment rate is, in fact, substantially lower than the lowest OECD countries—Mexico (36%) and Turkey (31%).
The average share of the labor force that has attained at least some upper secondary education in all G20 countries is 56%. This rate is more than twice that of China’s. China’s upper secondary attainment rate is also low when compared to the middle-income G20 counties like Argentina (42%) (Table 2) or BRICS countries (Brazil (41%), Russia (88%) and South Africa (28%))
Overall, we can conclude that China is a relatively extreme negative outlier when it comes to upper secondary attainment among developed and large middle income/developing countries. China’s overall upper secondary attainment rate (24%) is the same as that of a much less developed/much poorer nation, Indonesia (24%). This is true even for the youngest cohort, suggesting that this relationship is unlikely to change in the near future.
There are large discrepancy in educational attainment statistics in China that appears to exist among researchers/policymakers that rely on different sources of data. China’s Ministry of Education reported in 2013 that the rate of (at least) upper secondary attainment of 15-17 year-old youth in 2010 was 82.5%. However, according to the 2010 Census, the rate of upper secondary attainment for 15-17 year-old youth was only 53%. The Census-based data, in fact, appear to be consistent with the findings of field-based studies.
To begin to formulate an explanation of the discrepancy, we have produced Table 3. In the table we show the discrepancies in upper secondary attainment rates of 15 to 17 year old youth between MOE-reported statistics and the Census data for a ten-year period (2001-2010). The attainment rates in Columns 1 to 3 are taken directly from MOE statistical yearbooks. Column 2 shows MOE-reported numbers on the share of upper secondary VET (vocational education and training) students. Column 3 shows MOE-reported numbers on the share of upper secondary academic high school students. Column 1 is the sum of Columns 2 and 3. The figures in Column 4 are calculated from the 2010 Census data. To calculate the figures for each year in Column 4, we used data from cohorts aged 15-17 in the respective years. For example, when using the Census data for calculating the share of individuals that had attained at least some upper secondary school in 2001 (39.4%), we used data from the 2010 Census for the 24, 25 and 26 year old cohorts.
A review of the ten-year statistic series from MOE-reported sources and the Census show that the discrepancies between the sources only appeared in recent years. Given the higher reliability of the Census data as well as the consistency of the Census data with high quality in-the-field data, the question must be asked: Why is it that MOE-reported figures begin to diverge from the Census and start to be over-reported in the mid-2000s?
There is reason to believe that the over-reporting of overall upper secondary educational attainment is likely due to the over-reporting of upper secondary VET attainment. First, the rise in upper secondary VET attainment between 2005 and 2010 is higher than that of academic high school. Second, the demands on the MOE to expand upper secondary school, which were initially announced as national targets in the mid-2000s, were almost fully placed on the VET sector. The MOE was asked to increase enrollment in upper secondary VET to 50 percent by 2020. This means that after 2005 VET sector officials would be under great pressure to meet leader-set goals. Finally and most important, perhaps in part due to the reluctance of students to enroll into VET, the central government began to pay per-student-enrolled subsidies to local education bureaus. The announcement of the subsidy would give local officials a clear incentive to over-report VET enrollment. Curiously, in the year of the initial Central-Local VET subsidy transfers, which was in 2007, the amount of over-reporting jumped the most (6.8 percentage points). The next year, the jump was nearly as large (6.7 percentage points).
we have documented low levels of educational attainment in China. In 2010 only 24% of
China’s entire labor force had ever attended upper secondary school. China’s human capital is shockingly poor.
Can China rectify this problem? Good news is younger-aged cohorts are better educated than older members of the population. The steadily upward trend in upper secondary attainment in our data suggests access to upper secondary school is continuing to expand. The bad news, however, is that the rate of expansion in educational attainment for the labor force as a whole is going to be slow. Part of the problem is that the flow of younger cohorts through upper secondary school is still quite low—especially for rural China, the largest segment of China’s population. The key for China to improve its human capital is to put a massive effort into boosting rural educational attainment rates—NOW.
In transition period, If China fails to endow its labor force with such skills, not only will many individuals have a difficult time finding employment, the newly emerging industries may also falter from a short supply of skilled labor. The whole economy may experience slower development. This could be a path that would lead China towards the middle-income trap. The path away from this trip can only be paved with much higher investment into a well-educated rural labor force. China is already far behind. It is going to need a massive campaign starting immediately.