MEASURING REGIONAL INEQUALITY OF EDUCATION IN CHINA: WIDENING COAST-INLAND GAP OR WIDENING RURAL-URBAN GAP?

Transcription

1 MEASURING REGIONAL INEQUALITY OF EDUCATION IN CHINA: WIDENING COAST-INLAND GAP OR WIDENING RURAL-URBAN GAP? Xiaolei Qian and Russell Smyth Department of Economics, Monash University, Australia ABERU Discussion Paper 12, 2005 ABSTRACT This paper measures education inequality between the coastal and inland provinces and compares it with rural-urban educational inequality in China using Gini education coefficients and decomposition analysis. The main finding of the paper is that disparities in access to education between rural and urban areas rather than between coastal and inland provinces are the major cause of educational inequality in China.

2 1 INTRODUCTION While the linkages between education and income and between education and productivity have been well explored in the economics literature, in recent years increasing attention has been paid to equity issues in education. Equal access to education is one of the basic human rights to which all are entitled. For the individual, a good quality education not only enhances their capability to generate income, but also contributes to their general well-being. On a larger scale, education plays an important role not only in facilitating economic growth but also in contributing to social equity. Empirical studies have found that unequal distribution of education tends to have a negative effect on income dispersion (see eg O Neill, 1995; Park, 1996) and on economic growth (see Lopez, Thoma and Wang, 1998). A study of China is useful for exploring regional inequality issues, given the socioeconomic diversity which exists across China s regions. In recent inequality studies of China, much research has focused on the disparities in income distribution and differences in economic growth between different regions. In terms of real per capita GDP, per capita consumption expenditure and gross value of industrial and agricultural output of the Chinese provinces, most studies have found that although the rural-urban gap remains the main cause of overall regional inequality, disparities between the coastal and inland provinces have shown sharp increases (see e.g. Jian 1996; Kanbur and Zhang, 1999; Ying, 1999; Song, Chu and Cao, 2000; Lee, 2000; Yang, 2002; Bao et al., 2002). Recently, increasing attention has also been paid to regional differences in education between and within Chinese provinces. While a growing literature exists which explores the education and economic growth nexus in China, results from empirical studies are still the subject of heated debate. Some studies have found empirical support for the view that education has contributed to economic growth in China (Wang and Yao, 2003; Chen and Feng, 2000); others, based on cross-provincial data, have shown that differences in the rates of return to human capital by region are statistically insignificant (Chen and Fleisher, 1996; Maurer-Fazio, 1999; Jones et al., 2003). Recently significant improvement in measuring inequality of education has provided a powerful tool to explore regional equity issues. Various formulas to calculate the Gini coefficients of education have been developed (Thomas et al., 2001; Castello and Domenech, 2002; Wako, 2002; Zhang and Li, 2002). Gini coefficients and decomposition analysis have been used to examine educational inequality within and between countries. Representative of the existing literature, Zhang and Li (2002) examine international inequality of educational attainment and find, by decomposition of the Gini coefficients of education, that the gap between developing and developed countries is one of the main components of world inequality in educational attainment in both 1960 and The contribution of this paper is to measure education inequality between the coastal and inland provinces and compare it with rural-urban educational inequality using Gini coefficients and decomposition analysis. We measure educational inequality in terms of educational attainment rather than expenditure on education. Thus, while expenditure on education measures disparities in inputs to education, this study examines disparities in educational outputs. Of existing studies of educational inequality in China, Thomas et al. (2001), using average years of schooling as a proxy for educational attainment, find that the education Gini coefficient for China declined between 1960 and However, in their study, the education Gini coefficient is calculated from the cumulated proportion of the population by certain education level and thus it is not a region-based analysis. Other studies examine either the rural-urban gap or the coastal-inland gap in education, but not both. The Asian Development Bank (2002) and Hannum (1999) examine the rural-urban gap in basic education at the national level, while Tsang (1994; 1996) examines differences in education expenditures by education level at the provincial level for To realize our objective we use the Gini coefficient of education to measure the magnitude of educational disparities between coastal and inland provinces and between rural and urban areas in 2

3 China between 1990 and Foreshadowing our main results, we find that the rural-urban, rather than the coastal-inland, gap, is the dominant component in the total education Gini coefficient. In contrast to the increasing coastal-inland gap in income distribution and economic growth, the differences between the educational attainment of the coastal provinces and that of the inland provinces fell slightly over the course of the 1990s, while the rural-urban gap in education increased. Thus, an uneven dispersion of education between rural and urban areas was the predominant component of overall educational inequality. 2 AN OVERVIEW OF THE EDUCATIONAL PERFORMANCE OF CHINA China has achieved remarkable gains in education since the establishment of the People s Republic in 1949, with the most impressive progress being made since the commencement of economic reforms. By the early 1960s, virtually universal enrolment in primary education had been realized, a coverage rate that still outpaces the rates found in several Asian counterparts. And the adult literacy rate grew from 60 per cent in 1960 to 85.5 per cent in 2001 (Ministry of Education [MOE], China, 2002). With an enrolment of 135 million primary school students and 5.9 million teachers in about 582,000 primary schools in 1999, China runs the largest primary school system in the world (World Bank, 2002). At the secondary school level, various types of education have been developed, including general secondary schools, vocational schools, specialized schools, skilled worker schools and adult secondary schools. The scale of higher education has also expanded. In 2000, there were 1,770 institutions of higher education, enrolling 5.56 million undergraduates (MOE, China, 2001). In a large country such as China, geographical, cultural and socio-economic conditions vary greatly from region to region. From 1949 to 1978, China was characterized by highly centralized policy making, planning, and administration; local governments were given little discretion in implementing centrally ordained policies (ADB, 2001). Significant decentralization reforms in the education sector started in the mid-1980s, taking the form of administrative and financial devolution, with an emphasis on the latter. The central government remains the authority for creating basic laws and policies and taking responsibility for setting the overall direction of development, medium- and long-term national plans, designing the national curriculum, and setting national education standards (ADB, 2001). Another key responsibility of the central government is operating and financing some institutions of higher education (see Tsang, 2000). Provincial governments have the authority to establish education policies that are consistent with national policies. Provincial governments are also held accountable for meeting education finance goals as prescribed under contractual agreements with lower-level government (ADB, 2001). The county government, the town government, and the village government are responsible for uppersecondary education, lower-secondary education and primary education, respectively (see Tsang, 1996). Financial reform has played a key role in the overall reorganization of the education sector since the early 1980s. The structure of educational financing has undergone a fundamental change from a centralized system with a narrow revenue base to a decentralized system with a much more diversified revenue base. Diversification of financial sources consists of broadening the base for the government s educational revenue through the mobilization of non-government resources. Official statistics suggest that between 1986 and 1991, 1000 billion RMB was spent on education from extra-budgetary resources (Zhang, 2001). However, disparities in the distribution of education by school level, across different regions and between genders, are becoming increasingly conspicuous. While attendance rates at the primary level are, by and large, similar in poor and rich areas, the enrolment-rate disparity between rich and poor provinces grows as students move on to secondary and higher levels. By 2000, there were about 520 counties which had not universalized nine-year compulsory education (Zhou, 2002). In 2002, illiterate and semi-literate Chinese made up per cent of the total population aged 15 and above, while illiterate and semi-literate female Chinese accounted for 16.9 per cent of 3

4 the total female population over age 15 (SSB, 2003). A study of disparities in basic education among counties in China between 1994 and 1997 showed that there was widening educational inequality between urban and rural counties and that poor counties were significantly disadvantaged in terms of per student recurrent expenditure, teacher quality, and physical conditions of schools (World Bank, 1999). On the one hand, decentralization has diversified education funding and provided increased autonomy and flexibility in school-level management by increasing mobilization of local resources. On the other hand, devolution has also brought serious problems of inequity both within and across provinces. Provinces which have experienced rapid economic growth have benefited from more financial resources. Furthermore, variation in local resources has translated into disparities in capital construction and teacher salaries and in the quantity and quality of teaching facilities and materials. 3 DATA AND METHOD In this paper two proxies for educational attainment are used: the average years of schooling of the population (AYS) in a given province and the percentage of graduates of junior secondary schools entering senior secondary schools (PG) for each province separately in rural and urban areas. The formula to calculate AYS is: AYS = 5* H + 8* H * H 14* H )/ POP (1) ( Here H t is the number of persons for whom t is the highest level of schooling attained; j=1, for primary, 2 for junior secondary school, 3 for senior secondary school and secondary technical school and 4 for college and above. The duration of the ith level of schooling is adopted from Wang and Yao (2003). POP is defined as the economically active population. The formula used to calculate PG is: New student enrolment of senior secondary schools P (%) = *100 % (2) Graduates of junior secondary schools Data used to calculate AYS by province are from the national census in 1990 and 2000 and those for computing PG by rural-urban area are obtained from yearly new students enrolment and graduates of regular secondary schools (SSB, 1991; 1996; 2001). AYS is a good proxy for human capital stock in terms of formal schooling. However, data used for computing AYS is only available at the provincial level. Due to a lack of data on school-aged children by province, the net enrolment rate (another commonly used proxy for education) could not be calculated. Fortunately, data for new students enrolment and graduates of secondary schools are available at both the provincial level and rural/urban level. As junior secondary education is compulsory, graduates of junior secondary schools can be interpreted roughly as school-aged children corresponding to senior secondary schooling. Thus, PG is an alternative to the net enrolment rate of senior secondary schools. Including differences in educational attainment between rural and urban areas and between coastal and inland provinces, the PG measure represents a more comprehensive indicator of regional inequality. In this study, we have 11 coastal provinces/municipalities: Beijing, Tianjin, Hebei, Liaoning, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong and Guangxi. In the approach using AYS, the remaining 19 provinces are treated as inland provinces. In the approach using PG, there are 18 inland provinces (Tibet is not included). Data for Chongqing is included in Sichuan province with both approaches. The education Gini formula, adopted from Thomas et al. (2001) is shown in the following equation: E 1 G = xi x j (3) µ N( N 1) i> j j 4

5 Here G E is the education Gini index; µ is the mean value of AYS or PG of the total sample; N is the total number of observations in the sample; x i and x j are AYS (of a given province) or PG (of urban or rural areas of a province). Decomposition of the Gini coefficient is a key to discovering the contributions of between and within groupings to overall educational inequality. The formula for decomposition of the Gini coefficient is adopted from Zhang and Li (2002): 2 2 G P ( µ / µ ) G + P ( µ / µ G + (4) = ) 2 G B Here, P i, represents the proportion of the population of subgroup i; µ i, is mean AYS or PG of group i, and G i is the Gini coefficients of subgroup i (i=1, 2). G B is the between-group contribution to total inequality. An alternative measure of educational inequality is a polarisation index, as defined by Zhang and Kanbur (2001): P = Between-group inequality/within-group inequality (5) Instead of decomposing the Gini index to reveal the contributions of different groupings to overall educational disparities, this index reflects the magnitude of polarisation by the ratio of inequality between and within each grouping. 4 EMPIRICAL RESULTS 4.1 Educational Attainment Measured by Average Years of Schooling The average years of schooling of the population (AYS) of a given province is used to measure educational attainment at the provincial level. We calculate the overall inequality of all 30 provinces, then that of the 11 coastal provinces and 19 inland provinces, in 1990 and The results are presented in Table 1. Table 1 shows the change in educational inequality for China as a whole and for the coastal and inland provinces separately as measured by the Gini coefficient of education (G E ), from 1990 to The Gini coefficient of education decreased 20.8 per cent for China over the course of the 1990s. The Gini coefficient decreased almost 30 per cent in the coastal provinces and 18 per cent in the inland provinces over the course of the decade. Table 1: Overall education inequality by region and changes in relative dispersion in 1990 and 2000 All Coast Inland (%) (%) (%) Mean G E

6 The decomposition formula as shown in Equation (4) above was used to examine the contribution of inequality within the coastal and inland provinces, and the extent to which the coastal-inland gap contributed to overall inequality. Table 2 presents the results. Table 2 shows that the contribution from the Gini coefficient within coastal provinces to total inequality decreased from 16.5 per cent to 14.7 per cent, while the contribution of inequality within the inland provinces to overall inequality increased by 4.58 per cent. The contribution of the coastal-inland gap showed a slight increase by 0.76 per cent from 52.9 per cent in 1990 to 53.3 per cent in Table 3 presents the polarisation index, which confirms the results from the decomposition of Gini coefficients reported in Table 2. In contrast to the decreasing Gini coefficients between and within coastal and inland provinces, the ratio of between-groups inequality to within-groups inequality rose slightly from 1.12 to The empirical evidence supports the view that there has been a convergence in educational attainment measured as the average years of schooling of the population of the 30 provinces in China from 1990 to During this period, the average educational attainment improved and the Gini coefficients of education declined. With regards to inequality of educational attainment in the 30 provinces, disparities in the coastal provinces and in the inland provinces have reduced at different rates. Moreover, decomposition of the Gini coefficients indicates that the widening gap in education between the coastal and inland provinces reflects a faster decline in educational inequality within the coastal provinces than within the inland provinces. Table 2: Decomposition of the Gini coefficient by region Coastal provinces Inland provinces Coastal Inland Growth (%) Table 3: A measure of polarisation Coast/Inland Between Within B/W Educational Attainment Measured Using the PG Approach In this section, we use the percentage of graduates of junior secondary schools entering senior secondary schools (PG) in the rural/urban areas of a given province to measure educational inequality between rural and urban areas and coastal and inland provinces. The 29 provinces are grouped into coastal provinces and inland provinces, and within each of these provinces, they are further divided into urban and rural areas. Thus, for each of 1995 and 2000, there are a total of 58 observations for China as a whole, consisting of 29 observations for each of the rural and urban groupings. This is further divided into 22 observations for the coastal provinces (one rural and one urban observation for each of the 11 coastal provinces); and 36 observations for the inland provinces (one rural and one urban observation for each of the 18 inland provinces). 6

7 Table 4: The Gini coefficients for rural, urban, coastal and inland groupings in 1995 and 2000 Year All Rural Urban Coastal Inland Growth (%) Table 5 Decomposition of the Gini coefficient by rural-urban and coastal-inland groups Rural/Urban Coastal/Inland Rural Urban R-U Inland Coastal C-I Growth (%) Table 4 presents the Gini coefficients for China as a whole and for rural China, urban China, the coastal provinces and the inland provinces for 1995 and In contrast to the results using the AYS approach, the overall inequality for each grouping increased. The Gini coefficient of education for China increased 4.19 per cent. The Gini coefficient for rural China increased 7.23 per cent while the Gini coefficient for urban China increased 0.12 per cent. The Gini coefficient for the coastal provinces increased 4.22 per cent and the Gini coefficient for the inland provinces increased 5.81 per cent. Thus, when educational attainment is estimated as the percentage of junior graduates entering senior schools, there is no convergence of educational attainment. The decomposition of the Gini index provides further information on the contribution of inequality within rural and urban areas and coastal and inland provinces to the rural-urban and coastal-inland gap in 1995 and Table 5 shows that differences within rural areas across the 29 provinces exhibited a dramatic decline by 11.2 per cent from 1995 to Differences within urban areas across the 29 provinces also declined by 3.9 per cent, but because the decline in differences within urban areas was not as large, the rural-urban gap showed a slight increase. In terms of the coastal-inland gap, contrary to the previous results obtained from the AYS approach, within-coastal provinces educational inequality increased, whereas within-inland provinces inequality declined. Overall, while the rural-urban gap in educational inequality widened slightly, the coastal-inland gap narrowed marginally from 1995 to To investigate more closely the disparities between rural and urban areas of the coastal and inland provinces, we further break down the Gini indexes within each grouping. The results are presented in Tables 6 and 7. Table 6 decomposes rural-urban inequality with respect to inland and coastal areas separately. The results suggest that when the rural-urban gap increased in the inland provinces, the rural-urban gap decreased in the coastal provinces. Table 7 shows coastal-inland educational inequality for rural and urban areas respectively. A substantial increase in educational inequality is observed in both rural areas and urban areas within the coastal provinces. This result further explains the increasing contribution from within-coastal educational inequality to overall educational disparity which was observed in the findings in Table 5. 7

8 Table 6 Rural-urban inequality decomposition within inland areas and coastal provinces Rural-Urban Rural Urban Inland Coast Inland Coast Inland Coast Growth (%) Table 7 Coast-inland inequality decomposition within rural urban areas Coastal-Inland Inland Coastal Rural Urban Rural Urban Rural Urban Growth (%) Table 8 Polarisation, measured as the rural-urban and coast-inland gap, within groupings Rural/Urban Coast/Inland All Inland Coast All Rural Urban Using the polarisation index, Table 8 summarizes and compares the contribution of the components under each of these groupings. Clearly, the rural-urban gap is the dominant component, contributing to the overall inequality of educational attainment in China. Since the coastal-inland polarisation index for each grouping is approximately 1, the contribution from differences within and between the groups is almost equal. In other words, the empirical evidence does not give support to the existence of a large coastal-inland gap of educational attainment across the provinces. While many studies on regional income inequality have found that the coastal-inland gap is a key factor driving overall inequality, the results here show that the rural-urban gap remains the dominant component in the case of regional inequality in education. When educational attainment is measured as the percentage of junior graduates entering senior schools, differences between rural and urban areas within a province have increased, with a slight downward trend in differences between the coastal and inland provinces. In summary, within coastal provinces, the rural-urban gap in the distribution of education is narrowing. However, inequalities measured within rural and urban areas of these coastal provinces are increasing. In contrast, for inland provinces, rural-urban disparities in educational attainment have expanded, with a declining trend among rural areas and a widening trend among urban areas. If the whole country is grouped into two categories: rural 8

9 areas and urban areas, we see that the coastal-inland gap is widening in rural areas while narrowing in urban areas. 5 CONCLUSION AND POLICY IMPLICATIONS Using both AYS and PG, the polarisation index, measured as the coastal-inland gap, shows a value of approximately 1. This indicates that the differences between coastal and inland provinces in educational attainment are not as sharp as the income disparities using the same groupings. Particularly, as indicated in the two approaches, when educational attainment is measured by AYS, the coastal-inland gap shows a slightly increasing trend; but when PG is used, the gap has narrowed slightly. Only within rural areas does the coastal-inland gap widen. In other words, studies using different proxies for educational attainment in cross-sectional regressions may achieve different results. With additional data at the rural-urban level, the PG approach provides more detailed information on the trend in educational inequality and provides empirical support for the argument that the rural-urban gap is the predominant contributor to overall inequality in educational attainment. Consequently, existing studies which have examined differences in educational attainment at the provincial level through just dividing provinces into coastal and inland groupings may have been unable to uncover the link between differences in regional economic performance and education inputs because of a failure to take into account urban-rural inequality. The different magnitude of regional differences in educational attainment, measured by the two proxies, AYS and PG, suggests that in terms of education access and equity, regional differences may vary by education level. Compared to the measurement of average schooling, PG identifies educational performance at a specific level - secondary schooling. It is possible that educational inequalities are larger, the higher the level of schooling. But the educated population declines by education level, partly due to the increasing private cost of receiving more schooling. Hence, the general measurement of educational attainment, averaging all levels of schooling, may not fully capture regional differences. Besides school attainment, large educational disparities also exist in funding, school facilities, teacher qualifications and school achievements across provinces and between rural and urban areas. From a policy perspective, the results suggest that reducing the rural-urban gap in educational attainment should be a prime objective for China. In addition to having less-established educational infrastructure in rural areas, rural families also face higher opportunity costs associated with educating children, due to the household responsibility system in the agricultural sector. Poor rural households face both direct and indirect costs of financing their children s schooling. A poor rural household cannot afford to send children to school if the price of schooling is too high or household income is too low. The indirect costs of schooling are the forgone income of the child while attending school. Rural households typically need their children to work to supplement household income through assisting in the fields (Jensen and Nielsen, 1997). This is an important reason for the high drop-out ratio in rural areas. The Chinese government is aware of the issue of inequities in access to education between poor and rich regions generally and a number of measures have been taken to mitigate the extent of inequality. Policies designed to facilitate educational development in poor minority areas emerged in the 1980s and early 1990s, as did large-scale intervention targeted toward improving education among the impoverished and, particularly, among girls (Hannum, 1999). A subsidy-surplus transfer scheme was also implemented, which was designed to transfer resources from relatively well-to-do governments to relatively poor governments. However, World Bank research suggests that since 1994, tax rebates, which have dominated transfers, have been origin-based and favored rich regions, while the equalization transfers introduced to offset the effects of tax rebates have been largely inadequate (World Bank, 2001). 9

10 In terms of reducing the rural-urban gap specifically rather than just reducing inequities between poor and rich regions, there are two policy implications. First, more financial aid should be offered to local governments in the form of direct subsidies from central government and inter-regional transfers from economically developed areas, which are targeted at universalizing compulsory education in poor rural areas and assisting in equalizing access to education for children living in those areas. Second, the central government needs to focus on the quality of education in rural areas. Nationalizing the curriculum, teaching materials and textbooks in some subjects, standardizing teacher qualifications and offering training programs for both teaching staff and administrators from rural areas are all means of enhancing school quality in impoverished rural areas and reducing the rural-urban gap in education. 10

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