Do Overseas Returnees Excel in the Chinese Labour Market

Overseas study is a global phenomenon and a major business internationally. But does overseas study pay off? Using data from the 2015 China Household Finance Survey (CHFS), we examine the labour market performance of overseas returnees in China. To obtain more accurate results, we matched each returnee with a local so that the domestic group is as similar as possible to the returnee group. We then conducted empirical analyses of the matched data. We find that compared with domestic postgraduates, returnee postgraduates earn about 20 per cent more annually. Moreover, the salary premiums paid for foreign graduate degrees can be attributed principally to the superior human capital gained from overseas education rather than from any “signalling” effect. Also, returnees with graduate degrees are more likely to enter high-income professions and foreign-funded ventures, and to reach higher positions in those organizations. However, we find no significant differences in income, occupation choices and positions between returnee and local bachelor's degree recipients. As such, we suggest that Chinese students and their families are best served when the students obtain a local undergraduate degree and then go overseas for graduate training.