An Analysis of Educational Inequality in Taiwan After the Higher Education Expansion

Two major educational expansions in Taiwan have resulted in a remarkable improvement of human capital accumulation for the last three decades, which is consistent with the long-run goal of education in improving individual well-being and international competitiveness. This study focuses on the expansion of higher education starting from the late 1980s. As the number of higher-educated workers entering the labor market each year has increased rapidly, this higher education expansion policy has encountered some critiques from the public. Evidence shows that the incidence of over-educated workers in the labor market has been continuously increasing after the expansion, which is considered to be a short-run problem from the policy. We also find that the overall educational inequality drops sharply, which is mainly contributed by the within age group component after decomposing educational inequality using the decomposable Theil index. Along with a larger increase in average schooling for women, a larger reduction in educational inequality for women than for men implies women have benefited more than men from the policy and the educational inequality between men and women is narrowing.