No abstract

We analyze household and school survey data from poor counties in six Chinese provinces to examine the effects of poverty, intra-household decision-making, and school quality on educational investments (enrollment decisions) and learning outcomes (test scores and grade promotion). Unlike previous studies, we use direct measures of credit limits and women's empowerment. Drawing a distinction between the effects of wealth (measured by expenditures per capita) and credit constraints, we find that the former improves learning while the latter reduces educational investments. We find evidence of a story of gender bias in which academically weak girls are more likely to drop out in primary school while most boys continue on to junior secondary school. Women's empowerment reduces the likelihood of dropping out but does not affect other outcomes. Finally, our measures of school quality have some effect on the duration of primary school enrollment but not on learning.

Since economic reforms began in 1978, the Chinese labor market has undergone a set of remarkable transformations that have dramatically affected the working lives and welfare of China's citizens. Like other rapidly growing developing countries, China has experienced rapid structural change featuring a steady flow of labor from agriculture to industry, and from rural areas to urban areas. As a transition economy, China has shifted gradually from planned allocation of labor in state-sector jobs to a more open labor market with increasing numbers of workers employed in the non-state and private sectors. Table 6.1 summarizes the magnitude of these changes, drawing upon official data. From 1978 to 2005, the share of labor employed primarily in agriculture fell from 71 percent to 45 percent, the share of labor working in urban areas increased from 24 percent to 36 percent, and the share of urban labor working in the state-owned or government sectors fell from 78 percent to 24 percent. [Table 6.1 about here] Although the large magnitudes of these changes are impressive, reform of the labor market has been halting, uneven, and difficult, with much additional reform required if China is to complete her transition successfully while maintaining her rapid development trajectory. Many of the challenges of labor market reforms relate to the

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