Higher Education Expansion and Earnings Premium: A Comparative Study of Two Systems in China

ABSTRACT: Tertiary education in the Chinese mainland has undergone unprecedented expansion since 1999, whereas the most recent expansion in Hong Kong was announced in 2000. Confucian philosophy, prevalent among ethnic Chinese, suggests that education is a fair qualification for selecting elites for high-paid jobs. However, economic structures and popular cultures differ considerably. This article examines the economic returns of a rapid expansion of higher education in two areas, Hong Kong and the Chinese mainland, with different economic systems but the same cultural heritage, i.e., the Confucian philosophy and its work culture. The results support the view that the declining quality of university graduates is the prime reason for shrinking earnings premium in both systems. The governments should revisit the policies of higher education development and shift the emphasis from quantity to quality, and quality assurance in particular. There is a global trend to establish a quality assurance framework to oversee higher education, and a similar development is observed in the Chinese mainland and in Hong Kong. KEYWORDS: human capital, earnings premium, higher education expansion, Confucianism, “one country, two systems.”