Earnings Expectation and Graduate Employment: Evidence from Recent Chinese College Graduates

Abstract

Chinese college graduates have faced increasing labor market competition since the expansion of tertiary education. Given rigid market demand, graduates with realistic earnings expectations may experience a more efficient job search. Using the 2008 MYCOS College Graduate Employment Survey, this study finds that a 1 000 yuan reduction in a graduate’s reservation wage can significantly increase the probability of finding a job by 66% and increase the likelihood of being employed six months after graduation by 92%. In addition, the gap between the reservation wage and the market wage has a positive impact. By slightly adjusting earnings expectations, college graduates can significantly improve job search efficiency. Market wages should be seen as reference points when adjusting income expectations.

Keywords

reservation wage / graduate employment / earnings expectation