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Inefficient Signalling, Education Arms Race and Education Inflation in China

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  • Weiguang Liu

Abstract

Since the higher education expansion and education marketization from 1998, China¡¯s education inflation has become increasingly serious. And correspondingly, the income of graduates remains in a low level. This paper built a model and explained two important reasons. First, the quality of Chinese high education is relatively low, which means the signal effect of education will be less efficient. Second, every individual has an incentive to occupy higher status in the education hierarchy, which means there is a zero-sum education arms race game. I try to build a simple but powerful model in this essay to explain how thses two factors contribute to Chinese education inflation and how they intertwine with each other.

Suggested Citation

  • Weiguang Liu, 2018. "Inefficient Signalling, Education Arms Race and Education Inflation in China," Applied Economics and Finance, Redfame publishing, vol. 5(6), pages 61-75, November.
    • Handle: RePEc:rfa:aefjnl:v:5:y:2018:i:6:p:61-75
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    References listed on IDEAS

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    1. Patrizia Ordine & Giuseppe Rose, 2017. "Too Many Graduates? A Matching Theory of Educational Mismatch," Journal of Human Capital, University of Chicago Press, vol. 11(4), pages 423-446.
    2. Rajagopal, 2014. "The Human Factors," Palgrave Macmillan Books, in: Architecting Enterprise, chapter 9, pages 225-249, Palgrave Macmillan.
    3. Arrow, Kenneth J., 1973. "Higher education as a filter," Journal of Public Economics, Elsevier, vol. 2(3), pages 193-216, July.
    4. Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 87(3), pages 355-374.
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