The Shrinking Earnings Premium for University Graduates in Hong Kong: The Effect of Quantity or Quality? |
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| Authors: | Hon-Kwong Lui Wing Suen |
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| Institution: | Lui:;Associate Professor, Department of Marketing &International Business, Lingnan University, Tuen Mun, Hong Kong. Phone 852-2616-8233, Fax 852-2467-3049, Email Suen:;Professor, School of Economics &Finance, University of Hong Kong, Pokfulam Road, Hong Kong. Phone 852-2859-1052, Fax 852-2548-1152, Email |
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| Abstract: | In 1989, the Hong Kong government embarked on a program to increase the provision of first-year first-degree places. The expansion of tertiary education represents a large and exogenous increase in the supply of university graduates to the territory. This article measures the labor market effects of the expansion program by studying the changes in earnings premium for university graduates. Two alternative hypotheses—crowding and quality effects—are identified to explain why the earnings premium shrank. The results support the view that the declining quality of university graduates is the prime candidate for the declining earnings premium. (JEL J31 , I28 , J18 ) |
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