SMU SOE Seminar Series (August 4, 2025): Listening to the Future: Economic Returns to English Proficiency in China

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ABSTRACT

Understanding the labor market return to English proficiency is increasingly important in the context of globalization. This paper provides the first rigorous causal evidence on the economic returns to English ability in China, leveraging quasi-experimental variation from provincial reforms to the English listening component of the National College Entrance Examination (NCEE) between 2005 and 2010. Using a nationally representative dataset of Chinese college graduates and a two-stage least squares (2SLS) strategy, we find that a one standard deviation increase in English proficiency raises monthly wages by approximately 20%. Mechanism analysis reveals that this effect operates through both enhanced productivity and improved access to high-paying employers suchas state-owned and foreign-owned enterprises.

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