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Impact of Overeducation on Wages in China

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  • Juan Yang
  • David Mayston

Abstract

The rapid expansion of China's higher education system in recent years has exceeded China's high rate of economic growth and produced a problem of overeducation and undereducation, defined respectively as whether graduates obtain jobs whose educational requirements are commensurate with their highest degree qualification on graduation. A pecking order model of employment offers is used to analyze the factors determining the overeducation of graduates across China. These include significant factors not found in other countries. The predictive hypothesis of a strong form of the pecking order model was tested under conditions of perfect wage flexibility dependent only on individual characteristics and not on the job obtained by the graduate. The hypothesis was rejected because the evidence showed that the Chinese labor market is imperfectly competitive due to the continued functioning of traditional bureaucratic norms. Instead, the analysis found that job level can have a significant effect on a graduate's wages, alongside other factors. The determinants of the probability of obtaining a higher-level job on graduation therefore remain important as factors influencing the graduate's expected wages, incentives, and risk of being overeducated for available employment.

Suggested Citation

  • Juan Yang & David Mayston, 2012. "Impact of Overeducation on Wages in China," Chinese Economy, Taylor & Francis Journals, vol. 45(2), pages 65-89, March.
    • Handle: RePEc:mes:chinec:v:45:y:2012:i:2:p:65-89
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    Citations

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    Cited by:

    1. 岩﨑, 一郎 & Iwasaki, Ichiro & 馬, 欣欣 & Ma, Xin Xin, 2019. "現代中国における男女賃金格差: メタ分析による接近," Discussion Paper Series 689, Institute of Economic Research, Hitotsubashi University.
    2. Ichiro Iwasaki & Xinxin Ma, 2020. "Gender wage gap in China: a large meta-analysis," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-19, December.
    3. Seamus McGuinness & Konstantinos Pouliakas & Paul Redmond, 2018. "Skills Mismatch: Concepts, Measurement And Policy Approaches," Journal of Economic Surveys, Wiley Blackwell, vol. 32(4), pages 985-1015, September.
    4. Dongshu Ou & Zhong Zhao, 2022. "Higher Education Expansion in China, 1999–2003: Impact on Graduate Employability," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 30(2), pages 117-141, March.
    5. Dai Binh Tran & Sasiwimon Warunsiri Paweenawat, 2023. "The returns to education and wage penalty from overeducation: New evidence from Vietnam," Bulletin of Economic Research, Wiley Blackwell, vol. 75(4), pages 1267-1290, October.
    6. Iwasaki, Ichiro & Ma, Xinxin, 2020. "Gender Wage Gap in China: A Large Meta-Analysis," CEI Research Paper Series 2020-5, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.
    7. Ren, Yanjun & Castro Campos, Bente & Loy, Jens-Peter & Wang, Xiaobing, 2020. "Start Smoking Earlier, Smoke More: Does Education Matter?," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304237, Agricultural and Applied Economics Association.
    8. Sasiwimon Warunsiri Paweenawat & Jessica Vechbanyongratana, 2015. "Wage Consequences of Rapid Tertiary Education Expansion in a Developing Economy: The Case of Thailand," The Developing Economies, Institute of Developing Economies, vol. 53(3), pages 218-231, September.

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