The Wage Difference of Graduates from Different Schools After the Expansion of Higher Education
Date Issued
2012
Date
2012
Author(s)
Lai, Wen-Jei
Abstract
The number of college graduates have increased dramatically since the expansion policy of higher education was implemented. The paper seeks to see the signaling effect of different schools on the wage of the college graduates after the education reform, especially the wage difference of employee if they graduate from the schools up-graded to universities, public/private schools and flagship schools. In this study, we employ the 1996 and 1997 college entrance examination data, merged with the 2000 to 2005 labor insurance data. We control the ability of graduates and their family background in our adjusted Mincerian regression model, and use Heckman two-step estimation to solve the sample selection bias. Results show that the OLS estimators produce slightly higher numbers than results produced by Heckman two-step method.
Our finding shows the evidence that the school reputation has strong effect on the wage of first entry into the labor market, but the long-term influence will decline. Graduates of the schools changing names into “universities” have lower wage than those who graduated from schools named “universities” originally. Graduates of public schools and flagship schools have higher wage returns, but after 5 years, the wage advantage will decrease. Small firms are more easily to be affected by the signaling effect, thus in the long run, when the employers detect the true ability of workers, they adjusted their wage greatly. In contrast to the small firms, the large firms are well aware of the workers’ true ability, so the paying decision is mainly affected by their working capability and experience rather than the reputation of workers’ school.
Subjects
education expansion
returns of education
signaling effect
wage difference
SDGs
Type
thesis
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