Analysis of the Chinese college admission system

Abstract

This thesis focuses on the problems of the Chinese University Admission (CUA) system. Within the field of education, the system of university admissions involves all of Chinese society and causes much concern amongst all social classes. University admissions have been researched since the middle of last century as an issue which has economic impact. However, little attention has been paid to the CUA system from the perspective of economics. This thesis explores a number of interesting aspects of the system. As a special case of the priority-based matching mechanism, the CUA system shares most properties of the Boston Mechanism, which is another example of a priority-based matching mechanism. But it also has some unique and interesting characteristics. The first chapter will introduce the main principles of the CUA system in detail and discuss stability, efficiency, strategy-proofness, and other properties under different informational assumptions. There is a heated debate about whether the CUA system should be abandoned or not. Educational corruption is one of the issues that have been raised. Corruption is a major issue of the CUA system as well as university admission systems in other areas in the world, e.g. India, Russia, etc. We contrast the performance of markets and exams under the assumption that there exists corruption in the admission process. The problem will be analyzed under perfect capital markets and also under borrowing constraints. We use auction theory to obtain equilibria of the market system and the exam system and analyse the effects of corruption on the efficiency of the two systems. We conclude that the exam system is superior to the market system if we only consider the issue of corruption. In the third chapter, we construct a model to reveal the forces that positively sort students into different quality universities in a free choice system under assumptions of supermodular utility and production functions. Given a distribution of student ability and resources, we analyse the planner's decisions on the number of universities and the design of the "task level" for each university, as well as the allocation of resources between universities. Students gain from completing requirements (tasks) in universities, while having to incur costs of exerting effort. In contrast to previous literature, our model includes qualifications as well as cost in the student's utility function, and educational outputs depend on qualification, ability and resources per capita. Our main focus is on the design of task levels. Our result differs from the literature as regards the optimal number of colleges. A zero fixed cost of establishing new colleges does not necessarily result in perfect tailoring of tasks to students. Furthermore, if the fixed cost is not zero, then the planner has to take fixed costs into account when deciding the number of universities.