Since ancient times, Chinese people have believed that reading changes their destiny, and education is closely related to income. However, recent statistics show that the rate of return to education is declining. Over time, it has become increasingly difficult for education to boost one's income. This phenomenon is mainly due to changes in the supply and demand of education and the challenges of the job market.
According to the Chinese Human Capital Report 2023 released by the Central University of Finance and Economics, the return on education for urban men fell from a peak of 8.3% in 2008 to 5.7% in 2020. Similarly, the rate of return for urban women fell from 10.0 per cent to 6.0 per cent over the same period. We can expect the rate of return on education to continue to decline in the near future. Moreover, after taking into account the rising cost of education, the real rate of return is even more alarmingly low.
The core reasons for the decline in the rate of return can be analyzed from two perspectives: supply and demand. On the supply side, the continuous expansion of domestic universities, coupled with the fact that more and more people are actively pursuing higher academic qualifications, has led to the increasing prevalence of highly educated people, and higher education is no longer scarce. As a result, in the labor market, there is an increasing supply of highly educated people.
At the same time, demand in the job market has shrunk due to the slowdown in China's economic growth. The probability that the average person will be able to get a well-paying job is gradually decreasing. The job market is highly competitive, making it increasingly difficult to find stable, well-paid jobs. This has led to increased wage pressures in the labor market as well as employment pressures for highly educated people.
In the face of this phenomenon, education and all sectors of society need to take some measures. First of all, educational institutions should pay attention to the importance of vocational education and provide courses that are more practical and employable, so that students can better adapt to the needs of the job market. In addition, students and parents also need to actively adjust their attitudes, academic qualifications are not the only path to success, and all-round development ability and practical experience are equally important to increase their competitiveness and employment opportunities.
It is also important for governments and businesses to work more closely with the education system to provide more internship and employment opportunities and facilitate the interface between learning and application. In addition, we should actively promote the transformation of the economic structure, cultivate new industries and employment opportunities, provide more choices and opportunities for college students, and reduce the pressure on employment.
Despite the challenges of declining returns in the education market, education remains fundamental to personal growth and lifelong development. While traditional educational values may face change, through integrated development and adaptation to the changing times, individuals can find success and satisfaction in a diverse employment environment.
In summary, the decline in the rate of return to education is the result of a combination of factors, and the popularization of academic qualifications on the supply side and the decrease in the demand side are the main reasons. This phenomenon reminds us of the importance of diverse learning development, emphasizing the importance of vocational education and practical experience, and actively promoting collaboration between the education system, government and business to find more flexible, inclusive and innovative employment opportunities.