The changing worth of a university education: A case study of Hong Kong during a period of rapid economic and social change, 1976 to 1986

This study examined education and earnings in Hong Kong during a period of rapid expansion both of the economy and of the percentage of university graduates among labor market entrants. Implications of these expansions were explored by analyzing census data from 1976 and 1986 to address two questions: (1) What were the wage differentials between male, full-time, secondary school and university educated employees aged 25 and 34 in 1976 and in 1986, and how did the wage differentials change over time? (2) How much of the difference in the wage gap between secondary school and university educated employees (or the "university premium") between 1976 and 1986 was due to redistribution of workers between occupations, and how much was due to changes in relative wages within occupations?;Regression analyses found that the university premium increased despite a 55 percent increase in the proportion of young, male, full-time workers who were university educated. The benefits of a university education, however, differed by occupation, place of birth (native-born, immigrants from China, and expatriates), and public sector employment. University educated workers in professional and managerial occupations, expatriates, and civil servants enjoyed higher wages than their counterparts. Higher education's payoffs were found to lie principally in its interaction with job experience: wage growth was more rapid for university educated workers than others.;A shift-share decomposition analysis found an overall increase in the university premium between 1976 and 1986 by 2.5 percent (that is, 0.0253 loge point). The increase in the university premium at labor market entry due to redistribution of university educated workers between occupations (0.0850) was offset by the decline in the university premium due to changes in relative wages within occupations (...