The Broken Promise of Human Capital Theory: Social Embeddedness, Graduate Entrepreneurs and Youth Employment in China

Abstract

Human capital theory has been one of the most influential theories in national policymaking since the 1980s. The major assertion is that individuals can attain better employment outcomes through investing in degrees and credentials. Following the economic reforms of the late 1970s, Chinese families have reverted to the tradition of investing in the education of their children, hoping that the human capital accumulated through higher education will translate into economic capital, enhancing their children’s upward social mobility. However, the rapid expansion of Chinese higher education since 1999 has caused an educational inflation, adversely affecting graduate employment. This article critically examines China’s response to global capitalism through bureaucratic adjustment of higher education expansion in managing the market transition and social reproduction of labour challenges within a relatively short historic period of ‘compressed development’. Without effective articulation between higher education expansion and the changing labour needs during the market transition, the rush to higher education expansion has created different forms of social and economic contradictions. More specifically, this article argues that social embeddedness including parental influence, institutional policies, and social capital are important factors to be considered in explaining the relationship between education and work in the Chinese context.