Teaching to the tests: an economic analysis of traditional and modern education in late imperial and republican China

A traditional education system, based on the Confucian classics, was a pillar of imperial China's social structure for centuries, preparing elites for a series of highly competitive exams conferring gentry status and civil service positions. Reformers in late imperial China called for the modernization of educational institutions, seeing in Western education the skills necessary to develop China's economy. In the late 19th century, the traditional education system was joined by a “modern”, Western track, which offered teaching in science, math, social science, law, and engineering. In this paper, early 20th century employee records from the Tianjin-Pukou Railroad are analyzed to identify differences in labor market outcomes associated with study in the traditional and modern educational systems. The employee records reveal that modern and traditional education were both associated with wage premiums, but that these were significantly larger for individuals trained at high levels in the modern system, especially those trained in engineering. Individuals trained in the traditional system worked disproportionately in the clerical department of the railroad, while those with modern education were more often in managerial and technical roles. Qualitative and quantitative evidence suggests that these results are not driven by sorting into educational institutions according to ability. These findings indicate that beyond years of schooling, the content of schooling can play an important role in the process of economic development.