China’s Expansion of Higher Education: the Labour Market Consequences of a Supply Shock

John Knight, Deng Quheng and Shi Li ()

No 2016-04, CSAE Working Paper Series from Centre for the Study of African Economies, University of Oxford

Abstract: In the decade 1998-2008 China expanded enrolment in higher education almost six-fold. For the examination of its short term labour market consequences, this unprecedentedly huge and sudden policy change might be regarded as a natural experiment. After providing a theoretical framework for analysis, the paper uses urban labour market surveys to analyse how the labour market adjusted to the supply shock. Three outcomes are examined: the effect of the expansion on wages, on unemployment, and on access to ‘good jobs’. The shock is found to reduce relative wages, raise the unemployment rate, and reduce the proportion in good jobs, but only for the entry-year or entry-period cohort of graduates. The effect is fairly powerful for entrants, especially university rather than college graduates, but incumbent graduates are largely protected from the supply shock. An attempt is made to examine the labour market effects of the quantitative expansion on educational quality. The paper provides insight into the operation of China’s labour market in recent years.

Keywords: China; cohort effects; graduate unemployment; higher education; labour market; returns to higher education (search for similar items in EconPapers)
JEL-codes: I21 I23 J24 J31 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-cna, nep-edu, nep-lma and nep-tra
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Journal Article: China’s expansion of higher education: The labour market consequences of a supply shock (2017)
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