College Expansion and Heterogeneous College Premiums: Evidence from the Marginal Treatment Effect in China

Abstract This paper employs a heterogeneous education return framework to estimate the marginal treatment effect of college expansion on college premiums in China. Our findings are threefold. First, we capture heterogeneous college premiums after college expansion, especially in urban areas and provinces with abundant educational resources. Second, the treatment effects follow a quantitative sequence of ATT (Average Treatment Effect on Treated) > LATE (Local Average Treatment Effect) > ATE (Average Treatment Effect) > TNT (Average Treatment Effect on Non-Treated), which reconciles the puzzle that instrumental-variable estimates are always larger than OLS estimates in the literature. Third, we demonstrate that policies designed to increase the college entrance probability by a proportion will lead to groups with lower college premiums attending college, which is ineffective compared to those equalizing educational opportunities. This paper furthers our understanding of education premiums and sheds new light on the quality mechanism governing the impact of college expansion on college premiums.