Expansion of higher education and underemployment of college graduates: evidence from China

This paper examines the effect of China’s college expansion on the underemployment of college graduates, specifically referring to the scenario where a worker’s educational attainment exceeds the education level required for the job. We implement a difference-in-differences extension of propensity score matching (DD-PSM) to identify the causal effect of higher education expansion on underemployment. Our results show that college expansion significantly increases the likelihood of college graduates being underemployed. Furthermore, heterogeneity analyses suggest that male workers are more likely to be adversely affected by the expansion. Our findings are robust to alternative identification strategies leveraging provincial variation in access to higher education resources.