13 Returns to education in urban China’s transitional economy Reassessment and reconceptualization Wei Zhao and Xueguang Zhou Some of the earliest reforms associated with institutional changes in post- Mao China were manifested in the education system. One of the major policy changes in 1977, only one year after Mao Zedong’s death, was the resump- tion of the national examination for college admission, historically a primary gatekeeper of social mobility in China’s social stratification system. The stigma associated with education in the Cultural Revolution disappeared overnight, and long queuing lines appeared at the doors of bookstores, librar- ies, and schools. Since then, the role of education has become salient in all spheres of political, economic, and social life. Beginning in the 1980s, new state policies have made “education” one of the most important criteria in cadre recruitment and promotion (Xu and Zhang 1992). Educational cre- dentials help individuals open doors to prestigious jobs and work organizations. In this chapter, we examine to what extent and in what ways the relation- ship between education and individual life chances has changed in China’s reform era, focusing on changing returns to education in the transformation of the state socialist economy in urban China. We have two goals. First, we assess changes in returns to education from a historical perspective by com- paring patterns in three selected years associated with distinctive historical contexts: 1965, 1978, and 1993. 1965 was the year before the disruption of the Cultural Revolution; 1978 marked the beginning of the economic reform; and 1993 was the year for which we have the most recent data for our study. Recent studies in this area have primarily focused on comparisons between the beginning phase of the post-Mao era and a more recent year in the reform process. One drawback of such a comparative framework is that, at the beginning of the economic reform in the late 1970s, Chinese society was still experiencing the aftermath of the Cultural Revolution, when the role of education had been severely suppressed by the radical state policies. Thus, returns to education in the early phase of the reform era may have under- estimated the role of education in China’s state socialist redistribution. At the same time, the longer historical perspective adopted here provides a more comprehensive picture and allows us to assess changes in the role of education in the ongoing transitional economy.