Education Mismatch And Its Influence On Income Disparity

In 1999,a major decision was made to implement the policy of enlarging enrollment in higher education,which has accelerated the historical process of education development.In only a few years,China has achieved the transformation of higher education from elitism to popularization.In 2017,the gross enrollment rate of higher education reached 45.7%.Under the long-term strategic decision of"developing the country through science and education",the quality of our citizens has been improved,the economy has made considerable progress,and the international standing has improved significantly.However,the limitation of employment market can’t accommodate with sharp increase in labor force due to the expansion of education.Hence the phenomenon of "educational mismatch" has been raised.As the two aspects of educational mismatch,over-education and undereducation refer to the education level individual received from school exceeds or is below the education level qualified for work,respectively.The term "over-education" was first proposed by Freeman to study the relationship between the expansion of the American higher education system and the graduate labor market after World War II.In the process of over-expanding in education,the rapid growth of higher education graduates surpasses the actual needs of the labor market,and some of the laborers have to choose the works that do not match with their own qualifications,resulting in the occurrence of knowledge unemployment,waste of resources and aggravation of income gap.The research raised earlier abroad and thus the relative theories are more mature.In recent years,more and more studies in China have confirmed the existence of this problem in our country.The research on educational mismatch and wage inequality is mainly based on the following aspects:First,the analysis of different measurements of mismatch in education and the influencing factors.By using the self-evaluation method,the mean value method or the mode method,the situation of educational mismatch in our country is measured.Then the two Binary response model or the Ordered regression model is applied to analyze the related influence factor;Second,the analysis of the income effects of educational mismatch.Based on the ORU model and the VV model,we either focus on the difference in productivity between education mismatches and moderate education or introduce dummy variables to analyze the effects of education mismatched on income;Third,the measurement and decomposition on the wage inequality problem based on the research methods studying the disparity among different regions,urban versus rural,and different industries.In this article,the following conclusions are obtained through a further innovation and research on the related educational mismatch and wage inequality problems based on both domestic and foreign relative research using China’s microcosmic survey data:Firstly,through the subjective method,the pervasiveness of the mismatch problem is confirmed in our country,with the rate of over-education up to 37.81%.The Logistic regression model has made a more in-depth analysis on the factors affecting the mismatch of education.The result shows that there is no obvious influence on mismatch by gender.In the case of marriage,high level of health,non-agricultural accounts and party members,the probability of over-education is lower,whereas the probability of undereducation becomes higher.Besides,increasing in age and level of education will prompt the occurrence of over-education.Moreover,regions,industries,unit types and enterprise sizes also have different impacts on educational mismatch.The Logistic model explains the causes of education mismatch from both subjective and objective perspectives,which provides support for exploring the causes and solutions for educational mismatches.Secondly,the model of discriminating human capital theory and signal theory is established to explore the transmission mechanism of educational mismatch wage based on ORU model and VV model.After the Ordered Probit model is added to correct the possible endogenous problem,the effect of over-education on the increase of wages is manifested mainly by the signal effect.Higher-level education will lead to an increase in the return rate by 25.08%,and insufficient education has a punitive effect on wages through the effect of productivity.It is of great importance to correct the problem of self-selection bias in the sample since the factor called "insufficient capacity",which is unobservable,has a significant negative impact on wages.Lastly,instead of studying wage inequality in China from the aspects of regional disparity,urban-rural disparity and industry disparity as in previous researches,the contribution from education mismatch to wage inequality is calculated based on Thiel index decomposition and calculation.After controlling the education variables,the direct contribution of the 2003 and 2008 educational mismatches to overall wage inequality is 1.23%and 1.61%,respectively.After controlling gender,region and industry respectively,the three-stage index of education and match degree is decomposed.The influence of educational error matching wage gap becomes more obvious,and there is a significant expansion trend in five years.Hence,educational mismatch is one of the important factors to explain the wage gap in China.Under the harsh realities of educational mismatch and wage inequality in China,in order to improve the status of employment and education and to promote the rational development of the labor market,some policy suggestions are put forward in this paper from four levels in the grim reality of education mismatch and wage inequality in our country.For the government,it is necessary to accelerate the transformation of government functions,promote the restructuring of economic system,and provide more effective political support and legal protection.For enterprises,the information asymmetry in the employment market should be improved,and more feasible assessment methods should be applied.For colleges and universities,one should focus on optimizing the structure of education,attaching importance to quality education,and training professional talents to adapt to the development of modern society.For individuals,we should establish a correct view of choosing a career and do what we can do.It is not encouraged to blindly pursue highly educated and high certificates to improve our competitiveness in the future career.Only by coordinating cooperation and playing a full role in various departments,can we achieve the harmonious unification of education and employment in China and a win-win result in education development and economic progress.Compared with the previous literature,the innovation of this paper can be summarized as follows:(1)A comprehensive model is constructed to explore the transmission mechanism of excessive education on wages,which provides support for the identification of human capital theory and screening theory.(2)The influence of education mismatch on the wage gap is analyzed based on the Theil index,which provides a new way to explain the phenomenon of wage gap in China.