Dynamics of rate of returns for postgraduate education in Taiwan: the impact of higher education expansion

Abstract

This paper analyzes the dynamics of rate of returns for postgraduate education and the determinants of wage premiums for postgraduate labor, especially for the impact of higher education expansions, in terms of quantity and quality, since the late 1990s in Taiwan. Utilizing quasipanel data over the 1990-2004 period and employing the double fixed effect model, the empirical results first confirm the existence of wage premiums for workers with postgraduate degrees. However, the analysis on the dynamics of wage premiums finds that it ranged from only 1.40 to 11.67% and decreased sharply in 2004, indicating that the pecuniary reward for postgraduate qualification seems not to be as high as expected. Along with the rapid expansion of higher education, the concern about its negative impact on rate of returns to education is witnessed in this study. The sharp increase in the supply of postgraduate labors appears to have a negative impact on an individual's wage premium. Similarly, a decline in the postgraduate labor quality along with higher education expansion has contributed to a negative wage effect.

Proliferation of educational credentials, changing economic returns, and rising occupational education requirements: Evidence in urban China from 2003 to 2008

“…If a large proportion of candidates for a college degree, even though well prepared, decide to opt out, the overall quality of the labor force would become lower. Meanwhile, if most qualified college graduates decide to postpone entering the job market, the match between education and the labor market for society would not be efficient and, thus, there would be a waste of social resources, or 'over-education' (Yang et al, 2011). Therefore, how to maintain a considerable level of returns to a college degree may be one of the focuses of education-related policies.…”

Mass Higher Education Development in East Asia

“…Some academic studies indicate that such a universal system has negative impacts on graduates' income level. For example, Yang et al ( 2011 ) investigate the rate of returns to postgraduate education in Taiwan during the 1990-2004 period. Although they confi rm the positive return to these students ranging from 1.40 to 11.67 %, they also fi nd that 'the sharp increase in the supply of postgraduate labour appears to have a negative impact on an individual's wage premium ' (p. 359).…”

Empirical Analysis of Return to Distance Higher Education in Different Disciplines

“…In this new century, numerous empirical studies have continued to analyze the disciplinary differences of educational returns and learner's income (Saha & Sensarma, 2011;Salas-Velasco, 2006;Thomas, 2000;Yang et al, 2011). Bell (2010) found that graduate students who majored in science, technology, engineering, and mathematics earned more than those who did not.…”