Colleges in China were instructed to massively expand their enrollment beginning in 1999, an event referred to as China’s Higher Education Expansion (HEE). As the HEE explicitly enlarged the share of high-skilled labor, there may be a potential positive effect of the HHE on rural children’s willingness to enter senior high schools. This is because their chances to get into colleges are improved. This study found that, after controlling for other observable factors, the probability for rural eligible individuals to participate in senior high schools increased by 0.18 more than their urban counterparts from 2000 to 2005, and this result was indeed caused by the HHE via increased expected gains. Based on the empirical results, the expected returns to education are proven to be critical in educational decisions. To build an intelligent country, the government should raise returns to education by reforming the educational supply and eliminating the distortions and misallocations that depress returns to education.
