Determinants of graduates' job opportunities and initial wages in China

• Published date: 01 March 2017
• DOI: http://doi.org/10.1111/j.1564-913X.2015.00030.x
• Date: 01 March 2017

Copyright © The author 2017

Journal compilation © International Labour Organization 2017

International Labour Review, Vol. 156 (2017), No. 1

* School of Economics and Management, Northwest University, Shaanxi, email: 544790789

@qq.com. The author wishes to thank the Social Science Foundation of the Shaanxi Education

Department for nancial support (No.14JK1723).

Responsibility for opinions expressed in signed articles rests solely with their authors, and

publication does not constitute an endorsement by the ILO.

Determinants of graduates’

job opportunities and initial wages in China

Jun KONG*

Abstract. Based on a sample of new graduates in the Beijing area, this study

examines how college prestige, major and sex affect their job search prospects

and initial wages. Using a parametric survival approach and a Heckman selection

model, it shows that graduates nd jobs faster if they come from prestigious uni-

versities, signalling ability and qualication. They also receive higher initial wages

than graduates from other tertiary education institutions. Engineering and busi-

ness graduates nd jobs more easily than law and science graduates, but liberal

arts and social science graduates receive higher wages. Female graduates nd jobs

faster than male graduates, but they earn less.

The basic schooling model used in labour economics holds that education

increases a worker’s productivity and raises wages. However, the signal-

ling model suggests that education increases earnings not because it increases

productivity but because it certies that the workers are qualied for particu-

lar jobs. While these theories have typically been tested with samples of work-

ers who had different labour market experiences and educational attainment

levels, this study uses a survey of tertiary education graduates six months after

their graduation to nd out whether the same education yields the same job

opportunities and initial wages. Any differences observed in these respects will

not reect productivity differentials since the graduates in the sample gener-

ally have no job experience.

The rst aim of this study is to test the signalling model by proxying col-

lege prestige for quality of education, as a factor that may affect graduates’ job

opportunities and initial wages. A second aim is to test the theory of compen-

sating wage differentials, whereby risky or otherwise undesirable jobs should

offer higher wages than non-risky jobs. Another aim is to test Mincer and Pol-

achek’s (1974) theory regarding the gender wage gap, namely, that discontinu-

ity in women’s labour market attachment might explain a substantial part of