Increasing the income of rural residents and accelerating rural industrialization are among the priorities of the Chinese government. 1 Human capital, especially education, plays an important role in this process. The premise, however, is that the labor market functions well; to be specific, human capital should be awarded in the market, which in turn may serve as an incentive to promote the accumulation of human capital. In this article, we investigate the role played by education in rural industrialization and evaluate China’s rural labor market in the 1990s by estimating the return to education.