Labor Supply Shock and Wages of Young Workers:Evidence from the Expansion in China's Higher Vocational Education
China has increased higher vocational education enrollment by more than one million since 2019,significantly reducing the supply of the young labor force.We consider this enrollment expansion as a supply shock and examine its impact on the wages of young workers who remain in the workforce.Using variations in the expansion across provinces and taking middle-aged employees as the reference group in a Difference-in-Differences specification,we show that the monthly wages of young workers in a high-expansion prov-ince(whose extent of expansion higher than the 75％percentile)increase by around 3.7％more than in a low-expansion province.Com-pared with workers with local hukou,the expansion has a greater impact on migrant workers.The wages of less educated workers rise more than those of higher education levels.We find that the enrollment expansion reduces the number of employees in labor-intensive en-terprises and increases the employment probability of the young labor force.This study has major implications for understanding the im-pact of college expansion on wage gaps and the labor demand elasticity in labor-intensive enterprises.
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