Abstract Using the data from a survey covering 31 China’s provinces in 2012, we have estimated the return to education of urban and rural labors employed in urban areas, and then discussed the reason for difference between urban and rural return to education and the problem of the urban-rural wage gap in urban labor markets, by distinguishing the impact of human capital and employment inequality on returns to education. The result indicates that: (1) The return to education in rural China would be seriously underestimated when the nonrandom sample selection was ignored, and accordingly the corrected urban-rural wage gap was much smaller than the uncorrected one. (2) The difference between urban and rural return to education and the urban-rural wage gap were mainly result from the inequality in employment, and the difference between human capital of urban and rural labors was not obvious. (3) Hence, in order to reduce the difference between urban and rural return to education, and then improve education in rural areas, it’s necessary to perfect the labor market system and eliminate the inequality in employment induced by family background.
2015, Vol. 31 
