Treating “work now or study further” as a calculation: the three years of early earnings versus decades of future income

6. Treating “work now or study further” as a calculation: the three years of early earnings versus decades of future income

Cost: There is no monetary cost. Setting aside about half an hour to do the math is all it takes.

In plain terms: Lay both options side by side on paper. Working early yields only three years of wages from low‑skill jobs. Continuing education, on the other hand, delivers extra yearly earnings for the next three or four decades. In Chinese cities, each additional year of schooling raises average income by roughly 4.0% (in 1988) up to 10.2% (in 2001). These figures are somewhat dated and should be viewed only as rough estimates.

Benefit: This estimate applies to Chinese urban areas between 1988 and 2001. The percentage increase in income linked to one extra year of schooling is known as the return on education. The original text notes that this rate rose sharply from 4.0% per year in 1988 to 10.2% in 2001, especially after 1992. It reflects the growing wage premium enjoyed by university graduates compared with those without higher education. This figure offers a locally relevant benchmark for converting “one extra year of study” into an expected lifetime income gain. For a global average, see Section 7 of this chapter (global average return on an extra year of schooling).

Evidence grade: B

Sources: Zhang J, Zhao Y, Park A, Song X (2005). Economic returns to schooling in urban China, 1988 to 2001. Journal of Comparative Economics, 33(4), 730-752. <https://doi.org/10.1016/j.jce.2005.05.008>

Notes: Before performing the calculation, subtract the tuition waivers and grants mentioned in Section 4 (vocational school costs and aid), as well as the mortality impact discussed in Section 2 (extra year of schooling and mortality). The data end at 2001 and cover only urban residents, so they cannot be directly applied to today’s situation; the same caveat applies to the 9% global average cited in Section 7. Results will naturally vary from person to person. For individuals facing high tuition fees, mismatched majors or occupations, or lengthy study periods, the net benefit may indeed be negative — but this only indicates that that particular path is unwise, not that education as a whole is worthless. Several factors cannot be captured by the formula: legally mandated educational requirements (see Section 5 on integrated vocational admissions and separate exams), resistance to automation (see Section 10 on selecting automation‑resistant skills), and the possibility of switching careers. Ultimately, the benefits accrue to the individual.