An Economic Analysis On The Decline Of Graduates' Starting Salary

Nowadays, more and more people pay their attention to the employment issue of graduates. The graduates' starting salary has been declined since 2003 because of the expansion of Higher Education. The graduates' starting salary is not only an economic issue, but also a significant social issue. The graduates' starting salary, which shows the value of a graduate, is the repayment of human capital investment. So we should pay more attention to the university graduates' starting salary.The starting salary of graduates is discussed based on the data of survey on graduates. It is found that the starting salary of graduates is significantly determined by the degree, work area, the major, the work department and vocation. With the analysis of Labor Supply and Demand Theory, the Labor Market Segmentation Theory and the Human Capital Investment Theory, it is found that after the expansion of Higher Education, the demand of graduates is not large enough compared with the surplus of graduates, which pulls down the starting salary of graduates. Through the substantial analysis of the structures of majors and academic credentials on employment, it points out that the disequilibrium of structure balance between the majors and employment positions is one of the major factors on the starting salary decrease. Graduates could make more profit in higher frequency range of labor mobility. But the segmented labor market is so serious that it decreases the mobility of graduates and finally decreases the starting salary. The last but not the least important is that the decline of the quality of Higher Education influences the quality of graduates. It further declines the starting salary of graduates.In order to raise the starting salary of graduates, we should control the gross number of university students, optimize the Higher Education structure, decrease the extent of segmentation and enhance the quality of Higher Education.