Abstract: The paper uses micro econometrical method and analyses the effect of compulsory schooling law on rural and town residents’ education and earnings based on micro data of Jilin in 2005, supported by the law’s implementation in the 1980s in China. The estimating results show that roughly 8.0 percent of rural poten tial dropouts remain in school because of compulsory schooling law, whereas the town proportion is about 2.2 percent. Moreover, we exploits whether students who attend school longer because of compulsory schooling re ceive higher earnings as a results of their increased schooling. Two-stage least squares results suggest that return of schooling of the town male residents who are forced to attend school by compulsory schooling laws is increased by 4.5 percent as a result of their increased schooling and the others’ are not affected.

Keywords: compulsory schooling law；return of schooling；instrumental variable