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The Shrinking Earnings Premium for University Graduates in Hong Kong: The Effect of Quantity or Quality?

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  • Hon‐Kwong Lui
  • Wing Suen

Abstract

In 1989, the Hong Kong government embarked on a program to increase the provision of first‐year first‐degree places. The expansion of tertiary education represents a large and exogenous increase in the supply of university graduates to the territory. This article measures the labor market effects of the expansion program by studying the changes in earnings premium for university graduates. Two alternative hypotheses—crowding and quality effects—are identified to explain why the earnings premium shrank. The results support the view that the declining quality of university graduates is the prime candidate for the declining earnings premium. (JEL J31, I28, J18)

Suggested Citation

  • Hon‐Kwong Lui & Wing Suen, 2005. "The Shrinking Earnings Premium for University Graduates in Hong Kong: The Effect of Quantity or Quality?," Contemporary Economic Policy, Western Economic Association International, vol. 23(2), pages 242-254, April.
    • Handle: RePEc:bla:coecpo:v:23:y:2005:i:2:p:242-254
    DOI: 10.1093/cep/byi018
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    Cited by:

    1. Chenhong Peng & Paul Siu Fai Yip & Yik Wa Law, 2019. "Intergenerational Earnings Mobility and Returns to Education in Hong Kong: A Developed Society with High Economic Inequality," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 143(1), pages 133-156, May.
    2. Frances Xu Lee & Wing Suen, 2023. "Gaming A Selective Admissions System," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 64(1), pages 413-443, February.
    3. Francis Green & Golo Henseke, 2016. "The changing graduate labour market: analysis using a new indicator of graduate jobs," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-25, December.
    4. Patricia Cortés & Jessica Pan, 2013. "Outsourcing Household Production: Foreign Domestic Workers and Native Labor Supply in Hong Kong," Journal of Labor Economics, University of Chicago Press, vol. 31(2), pages 327-371.
    5. Shihui Ma, 2021. "Diverging College Premiums: A General Equilibrium Framework on China's College Expansion Policy," Annals of Economics and Finance, Society for AEF, vol. 22(2), pages 289-315, November.

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    More about this item

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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