The medium-run effect of China's higher education expansion on the unemployment of college graduates

China's unemployment rate for new college graduates has increased significantly in recent years, and many people attribute this increase to the higher education expansion policy. In this paper, we use three nationally representative data sets for 2000, 2005, and 2010 to investigate the short and medium term effects of the expansion policy on the unemployment of college graduates. Treating higher education expansion as an exogenous shock and using a difference-in-difference (DID) strategy, we find that this policy increased the unemployment rate of new college graduates in the short run, but the unemployment rate kept declining and the dis-employment effect mostly disappeared after five years. We also find some heterogeneous effects by gender, region, and city.