Higher Education Expansion in China and its Impacts on the Labor Market Outcomes of College Graduates

Abstract

In 1999, the Chinese government launched a higher education expansion policy. Between 1998 and 1999, the number of new students enrolled in colleges increased by 40%. The expansion continued for several years. By 2006, the number of new students enrolled in colleges increased to 5.5 million, which was 5 times that in 1998. Using the 1997 and 2006 waves of the China Health and Nutrition Survey, the paper studies the effects of the expansion policy on labor market outcomes of young college graduates. Treating the expansion policy as a natural experiment and using a difference-in-difference strategy, my research results suggest that the expansion policy causes the unemployment of young college graduates to increase by 8.7 percent, the full-time employment rate to decrease by 21 percent, and the average monthly earnings to decrease by 104.07 Yuan, equivalent to 18.35 Canadian dollars.