Lingsheng Meng: Skill Complementarities
time: 2015/11/20 views 707

Skill Complementarities and Returns to Higher Education: Evidence from the College Enrollment Expansion in China

Human capital has been playing a critical role in fostering China’s economic growth. This seminar, held in Room 710, Fanhai Building on 10th, December, 2015, focused on this topic and had the honor to invite Professor Lingsheng Meng of Tsinghua University to present his newest findings with his co-authors. Professor Zhao Chen of CCES hosted this seminar with the attendance of Professor Ming Lu, Professor Yan Zhang, Professor Changyuan Luo, and Professor Shuo Chen. Some of the PhD students also participated in the discussion.

  

As for the research question, Professor Meng pointed out that, in China, since 1999, the overall return to college increased despite a dramatic increase in the supply of college graduates. In the meantime, there were diverging trends of college premiums for workers of different seniorities. “The observed facts are inconsistent with the canonical model. That is the puzzle that this very research is concentrating on.” Professor Meng said.

Professor Meng argued that skill complementarity between workers with different levels of education could affect wages. “For firms where team productions or apprenticeship prevail, workers with more education may complement the productivity of team leaders, as they have better cognitive skills and are more effective in following instruction.” He explained, “thus, an increase in the supply of college graduates may affect the wages of senior worker.”

With that spirit in mind, Professor Meng set up a theoretical model which demonstrated the mechanism of skill complementarity. In his model setting-up, Y was equal to a production function where S denoted senior skilled workers, H denoted young skilled workers, and L denoted low skilled workers. This production function was assumed to be quadratic differential, continuous, strictly increasing, and strictly concave in each argument. Hence, under the propositions supported by the theoretical model, Professor Meng advanced to propose his empirical strategy to identify the relationship between wage and workers with different levels of education.

Based on the empirical results combined with his theory, Professor Meng concluded that the sudden increase in the supply of young college graduates had an overall positive effect on college premium. “There is complementarity among workers disaggregated by age and education.” He remarked.

 

 

 

 

By SHI Shuo

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