2016 Volume 83 Issue 2 Pages 167-180
It is well known that the transition from university to the labor market was smoothly articulated until the early 1990s. University students were able to receive an unofficial job offer before graduation. However, owing to the collapse of the economic bubble in 1992 and subsequent chronic deflation over 20 years, and to the rapid increase of enrollment led by deregulation of the Standards for Establishment of Universities, a serious problem of credential inflation has been produced.
As a result, based on reports by the Central Council for Education, MEXT began to recommend the trainability of students and promotion of career education at individual universities. Taking this into account, the purpose of this paper is to examine why and to what extent employment opportunities, including those for new graduates, are becoming harder to find, and then to examine how the ‘quality' of matching between job and students/employees affects prospective acquisition and non-monetary rewards when a recession hits.
Using the School Basic Survey (MEXT) and Basic Survey on Wage Structure (MHLW), this study first investigates whether demand and supply variables affected the employment rate from 1970 to 2015. Second, it estimates the effect of the wages of workers in their 50s and the average relative wage of college graduates on the relative ratio of new graduates to evaluate ‘replacement employment' and a ‘replacement effect' which predicts that aging of the workforce contributes to restricting the employment of university graduates.
Third, this paper employs an event-history analysis to examine the job searching process after the Lehman crash in 2008 by using the follow-up survey of High School Student Careers conducted in Dec. 2009, and also examines the effect of unwilling employment on the display of new graduates' vocational ability by using a survey of University Education and University Graduates.
The main findings are as follows. (a) Results using time-series regression analysis and Chow tests show that 1993 was the turning point in structural change of the HE system. The coefficients which affect the employment rate at the second stage (1993-2015) are even larger and statistically significant than the first stage (1970-1992). This result provides evidence that both the credential inflation after the early 1990's and a decline in the quality of graduates lowered the employment rate of new graduates.
(b) After 1993, structural change also occurred in the internal labor market. Due to the increasing middle-aged to elderly graduate male workforce, companies began to refrain from employing university graduates. (c) Motivation of students as well as bachelor's degrees from high-rank universities increased the hazard ratio for receiving an unofficial job offer, but experiences of internships and career education do not show significant impact. (d) Students with high achievement evaluate their prospective employer poorly, having lowered ‘reservation wages' to receive an unofficial offer as soon as possible. (e) Unwilling employment in tough-entry jobs continues to affect the negative impact on new graduates' self-evaluation of their ability, among males. Thus, the implications of these findings do not only promote (re)employment support but also raise the question of who set the ‘opportunity trap' which produced income disparity, and the historical process by which social equity was driven away.
