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A Pecking Order Analysis of Graduate Overeducation and Educational Investment in China

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  • D Mayston
  • J Yang

Abstract

Against the background of the recent rate of expansion of China's higher education system that has outstripped even China's own high rate of economic growth, the paper examines evidence of the emerging problem of graduate overeducation within China. Based upon a pecking-order model of employment offers and associated ordered probit model, it analyses the empirical factors which determine the incidence of graduate overeducation across China. The extent to which individual students have an incentive to become overeducated compared to a socially optimal level of their education is also examined in the context of a supporting economic model that compares individual and socially optimal levels of investment in education, in the face of labour market demands. The extent of the divergence between individual and socially optimal levels of investment in education, and of the associated levels of graduate overeducation, is found to depend upon how recent major increases in the supply of graduates within China will interact with the future growth rates in job specifications, in demand variables and in resultant graduate wages within China.

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Bibliographic Info

Paper provided by Department of Economics, University of York in its series Discussion Papers with number 08/25.

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Date of creation: Aug 2008
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Handle: RePEc:yor:yorken:08/25

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Keywords: Graduate overeducation. higher education policy. Optimal education investment. Economic growth in China;

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  1. H. Battu & C. R. Belfield & P. J. Sloane, 1999. "Overeducation Among Graduates: a cohort view," Education Economics, Taylor & Francis Journals, vol. 7(1), pages 21-38.
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  8. Alfonso Alba-Ramírez, 1993. "Mismatch in the Spanish Labor Market: Overeducation?," Journal of Human Resources, University of Wisconsin Press, vol. 28(2), pages 259-278.
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  16. Rehme, Günther, 2006. "Education, Economic Growth and Measured Income Inequality," Darmstadt Discussion Papers in Economics 25519, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).
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  18. Duncan, Greg J. & Hoffman, Saul D., 1981. "The incidence and wage effects of overeducation," Economics of Education Review, Elsevier, vol. 1(1), pages 75-86, February.
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  22. Frenette, Marc, 2004. "The overqualified Canadian graduate: the role of the academic program in the incidence, persistence, and economic returns to overqualification," Economics of Education Review, Elsevier, vol. 23(1), pages 29-45, February.
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Cited by:
  1. Juan Yang & David Mayston, 2009. "An empirical study on educational investment for all levels of higher education in China," Frontiers of Economics in China, Springer, vol. 4(1), pages 46-61, March.

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