20 May 2014
Today was our first lecture day at Southwest
University of Finance and Economics (SWUFE) in Chengdu. We had two lectures
this morning. In the first, we talked about the Chinese economy. I wish we had
had more time; the lecture could have easily been two hours longer, since
China’s economy has such a complex history. After the lecture, Cheryl, a Bush
School graduate now working at SWUFE, introduced the China Household Finance
Survey, a representative survey designed to determine financial details of
Chinese households, such as how much they are saving for their child’s future,
how much insurance they have, etc.
The general findings of the survey were very
interesting to me, especially since I just had completed Dr. Mu’s Advanced
Economic Development class a few weeks ago.
The survey found that the households who were
among the poorest shared three characteristics:
self-reported poor health from the head of
household, a low level of education, and no insurance.
The “self-reported poor health” characteristic
was interesting because in class we read articles about several development
interventions in which self-reported health was used as a dependent variable.
Findings showed that individuals who had better early childhood nutrition self-reported
better health than those who did not have adequate nutrition in the earliest
stage of life. Additionally, they reported higher hourly wages, up to 40%
higher in some cases! The link between poor health and wages is strongest in
physically demanding, low skilled jobs, which are common among the poorest.
Additionally, while writing the research paper
for this class, I found articles that claimed that unmarried males in China
self-report lower levels of health and lower wages. This has implications for
China, since it is predicted that due to the distorted sex ratio at birth,
anywhere from 30 to 50 million males (depending on the scholar) will be unable
to find a spouse in the next twenty years.
The survey also reported the average wage of
heads of household after having completed a certain level of education. These
results were as follows:
Primary
School: 22,271 RMB
Middle
School: 38,692 RMB
High
School: 60,927 RMB
When we studied education among the world’s
poorest in Advanced Economic Development, we talked about the perception of an
S-shaped curve in returns to education. An S-shaped curve would imply that
returns are higher at higher levels of schooling and that it is better to send
one child to high school than to send two children to primary school or middle
school. Though the S-shaped curve does not exist, it is perceived, and many
households in developing countries will focus all of their energy on the
education of one child, hoping they will reach the highest levels.
The results of the finance survey support all
of the evidence disproving the existence of an S-shaped curve and demonstrate steady
and even returns on education at each level of schooling.
- Andrea