The impact of education type on employability and wages in China

Abstract

The objective of this paper is to investigate the impact of China’s recent education policy on the labor market performance (i.e., employability and wages) of both general and vocational education graduates. The policy requires 50% of junior high school graduates to pursue secondary vocational education. The policy received public complaints because, in many parts of the world, students are free to decide on their future education. This paper measures the impacts of education type on labor market performance for both general and vocational education graduates, seeking to uncover the differing perspectives between Chinese authorities and the public. The study utilizes secondary survey data from the Chinese Social Survey 2021 (CSS2021) and employs the Mincer earnings function to analyze several main factors, such as years of education (yoe), years of work (yow), education type (et), interaction between edt and yoe and yow, and gender. The results highlight the significant role of education in enhancing both employability and wages—indicating that increased years of education positively correlate with improved employment prospects and higher wages. Regarding the relationship between wages and gender across both education types, males generally receive higher wages, while the dynamics in the relationship between employment and gender differ, with females exhibiting a greater likelihood of employment. The impact of education type on employability is slightly complicated. Employers do not prefer employing general education graduates. However, when we combined education type with years of experience, the findings revealed a preference among employers for hiring general education graduates with extensive work experience. This study has policy implications for the Chinese government in fostering the balanced development of vocational and general education, benefiting both individuals and society.