China's higher education expansion and unemployment of college graduates

We document the sharp expansion of higher education in China beginning in 1999 and analyze its impacts on the unemployment of college graduates, using nationally representative population surveys from 2000 and 2005. We show that the expansion policy has increased the probability of college attendance among high school graduates. Using a difference-in-difference strategy, we find that China's expansion policy has sharply increased the unemployment rate among young college graduates, and that the unemployment rate for college graduates increases more in non-coastal (especially central) regions than in large coastal cities. We suggest that encouraging regional mobility of college graduates and increasing matching quality can potentially reduce the unemployment rate at the national level.