The employment of the college graduate: Changing wages in mass higher education

Abstract

One of the main rationales for emerging economies such as Korea, Taiwan, Singapore and Malaysia to boost their output of higher education is to provide a highly skillful workforce for upgraded domestic industrial sectors. This discourse justifies the expansion of higher education along with the economic growth. However, few empirical studies have focused on the dynamic relationship between higher education expansion and the changes in graduate wages. The assumption has been that university graduates with higher skills and better professional training would enhance productivity as a whole. Therefore, their wages can be enhanced or, at least, maintained due to higher human capital accumulation. This chapter, using government data for Japan and Taiwan, will examine the macro relationship by juxtaposing the enrollment rate of higher education and real wage from 1990s to 2012. Our findings do not support our hypothesis and indicate that to some extent declining wages can be attributable to the over expansion of higher education enrollment, particularly when it is more than 50 % of the population. This finding has important implications for governments who wish to expand higher education in order to boost their economy.