Does schooling in China yield lower returns than schooling in Hong Kong?

This paper analyses the differential returns to education and language ability of natives and Chinese immigrants by using the one percent sample of the 1991 Population Census. Although natives and immigrants from China have the same ethnicity, the difference in earnings between natives and Chinese immigrants is significant. The raw immigrant-native earnings gap of working males is estimated to be around 24 percent. The results indicate that schooling in China yield much lower return than schooling in Hong Kong. If education is valued equally for natives and Chinese immigrants, the earnings gap can be reduced by not less than 21 percentage points. The differing returns to education may partly due to the differences in quality of education. My analysis suggests that English education pays handsomely in Hong Kong. It is estimated that an average English speaking worker enjoys an earnings advantage of 27 percent, paper also point out that some earlier studies of economic returns of educational investment in Hong Kong are biased downward.