1. The studies of returns to education in China, both urban and rural areas, mainly highlight the formal education, namely, educational attainment, e.g. years of schooling and educational level. The informal education, as off-job training and further education were skipped mostly because the inaccessibility of data. However, informal education is also an important contributor to human capital accumulation, and definitely play a significant role in one’s working life. The local residents in urban China better off in their employment characteristics than migrants. This paper provides estimates of both formal and informal education returns in urban China and explores the determinants besides human capital.
2. This paper will ask the question why and how the human capital, especially education, affects urban residents’ and migrants’ employment and income.
3. This paper has three objectives. First, we will evaluate the education returns in the term of formal education and make comparison with the past studies. Second, using China Household Income Project 2002 dataset, we estimate the differential of employment characteristics between urban residents and migrants, and check the effect contributed by formal and informal education in regression models with the inclusion of different control variables. We examine changes of education returns within gender, employment ownership and regions. There result will provide insights into the possible causes of the change of education returns. Third, we explain the factors besides human capital, especially like institutional system and national policy, how they affect people’s employment.
4. The concept, migrants, in this paper refers to those who working and living in towns and cities without hukou (residents registration) in China, they normally live in towns and cities for a long time just like a local residents.

Zhang, Junsen., Yaohui Zhao., Albert Park., Xiaoqing Song., Economic returns to schooling in urban China, 1988 to 2001, Journal of Comparative Economics 33 (2005), pp. 730-752. Morduch, J., Sicular, T., Politics, growth and inequality in rural China: dose it pay to jion the Party? Journal of Public Economics, 2000, 77(3), pp. 331-356. Wan, Guanghua., Accounting for income inequality in rural China: a regression-based approach, Journal of Comparative Economics, 2004(32), pp. 348-363. Fleisher, B.M., Dong, K., Liu, Y., Education, enterprise organization, and productivity in the Chinese paper industry, Economic Development and Cultural Change, 1996, 44(3), pp. 571-587. Fleisher, B.M., Wang, X., Skill differentials, return to schooling, and market segmentation in a transition economy: the case of Mainland China, Journal of Development Economics, 2001, 73(1), pp. 315-328.