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The Political Economy of Higher Education and Labour Markets: the Case of Malaysia

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The Political Economy of Higher Education and Labour Markets: the Case of Malaysia UNIVERSITY OF LONDON See over for Abstract of Thesis notes on completion Author (full names) .. AkLkl.tQ ........................... Title of thesis / I ) / I f e . £</... amd L&kouy Hch^kt'hi ■ The Case /acjria Degree This thesis starts by critically assessing human capital theory in the study of education and labour markets. It is argued that, while revealing the statistical significance of factors like ethnicity in education and labour markets, it does not help us to understand how education is provided and how labour markets are structured. The reason for this is that it leaves aside the historical and institutional contexts from the analysis, so that the question of why factors like ethnicity gain significance in education and labour markets cannot be addressed appropriately. These fundamental flaws undermine the relevance of human capital theory in the study of higher education and labour markets, and they are indeed compounded in the empirical application to the Malaysian case. Rather than applying the theory or remedying its analytical deficiencies, therefore, this thesis breaks with it and instead adopts a political economy approach that places the role of government at the analytical centre. Being a multi-ethnic country, Malaysia’s higher education and labour market policies reflect the trade-off between equity, or inter-ethnic distribution, and efficiency, or economic growth. The main purpose for this is to maintain social stability by lifting up the socio-economic status of Malays whilst increasing the economic pie to distribute. The New Economic Policy set the institutional foundation on which these policies are introduced and implemented. Access to higher education and provision of higher educational services are institutionally arranged in favour of Malays, and the public sector is geared towards employing them. Empirical analysis of the Population and Housing Census Malaysia 2000 points to ethnic differentials in access to higher education and sector selection in labour markets. It is also found that the ethnic factor persists from higher education through to labour markets, implying that the decisions of higher education enrolment and sector selection are made simultaneously. ProQuest Number: 10731703 All rights reserved INFORMATION TO ALL USERS The quality of this reproduction is dependent upon the quality of the copy submitted. In the unlikely event that the author did not send a com plete manuscript and there are missing pages, these will be noted. Also, if material had to be removed, a note will indicate the deletion. uest ProQuest 10731703 Published by ProQuest LLC(2017). Copyright of the Dissertation is held by the Author. All rights reserved. This work is protected against unauthorized copying under Title 17, United States C ode Microform Edition © ProQuest LLC. ProQuest LLC. 789 East Eisenhower Parkway P.O. Box 1346 Ann Arbor, Ml 48106- 1346 Notes for Candidates 1 Type your abstract on the other side of this sheet. 2. Use single-space typing. Limit your abstract to one side of the sheet. 3. Please submit this copy of your abstract to the Research Degree Examinations Office, Room NBQ1, University of London, Senate House, Malet Street, London, WC1E 7HU, at the same time as you submit copies of your thesis. 4. This abstract will be forwarded to the University Library, which will send this sheet to the British Library and to ASLIB (Association of Special Libraries and Information Bureaux) for publication in Index to Theses. For official use Subject Panel/Specialist Group BLLD....................................... Date of Acceptance The Political Economy of Higher Education and Labour Markets: The Case of Malaysia Akihito Aihara July 2009 This thesis is submitted in fulfilment of the requirement for the degree of PhD in Economics Department of Economics School of Oriental and African Studies The University of London l I declare that the work presented in this thesis is entirely my own and has not been written for me, in whole or in part, by any other person(s). I also declare that any quotation or paraphrase from the published or unpublished works of another person has been duly acknowledged in the work which I present for examination. Akihito Aihara 2 ABSTRACT This thesis starts by critically assessing human capital theory in the study of education and labour markets. It is argued that, while revealing the statistical significance of factors like ethnicity in education and labour markets, it does not help us to understand how education is provided and how labour markets are structured. The reason for this is that it leaves aside the historical and institutional contexts from the analysis, so that the question of why factors like ethnicity gain significance in education and labour markets cannot be addressed appropriately. These fundamental flaws undermine the relevance of human capital theory in the study of higher education and labour markets, and they are indeed compounded in the empirical application to the Malaysian case. Rather than applying the theory or remedying its analytical deficiencies, therefore, this thesis breaks with it and instead adopts a political economy approach that places the role of government at the analytical centre. Being a multi-ethnic country, Malaysia’s higher education and labour market policies reflect the trade-off between equity, or inter-ethnic distribution, and efficiency, or economic growth. The main purpose for this is to maintain social stability by lifting up the socio-economic status of Malays whilst increasing the economic pie to distribute. The New Economic Policy set the institutional foundation on which these policies are introduced and implemented. Access to higher education and provision of higher educational services are institutionally arranged in favour of Malays, and the public sector is geared towards employing them. Empirical analysis of the Population and Housing Census Malaysia 2000 points to ethnic differentials in access to higher education and sector selection in labour markets. It is also found that the ethnic factor persists from higher education through to labour markets, implying that the decisions of higher education enrolment and sector selection are made simultaneously. 3 TABLE OF CONTENTS ABSTRACT..............................................................................................................3 TABLE OF CONTENTS....................................................... 4 LIST OF TABLES...................................................................................................7 LIST OF FIGURES.................................................................................................8 ABBREVIATION....................................................................................................8 ACKNOWLEDGEMENT.................................................................................... 10 CHAPTER 1 INTRODUCTION: CONTEXTUAL BACKGROUNDS....... 13 1.1 M a l a y sia in B rief Retro spect ................................................................................14 1.2 H igher E ducatio n In v estm ent in M a l a y sia ..........................................16 1.3 Consequences of H igher Educatio n In v e st m e n t ................................24 1.4 Resea r c h A g endas a n d Co m p o sit io n .....................................................26 CHAPTER 2 HUMAN CAPITAL THEORY, EDUCATION AND LABOUR MARKETS: REVIEW OF THE LITERATURE............................................ 32 2.1 Empirical Contradictions a n d Pu zzles .................................................32 2.2 M incerian Ea r nin g s Fu n c t io n ................................................................ 40 2.2.1 Mincer (1958): Compensating Differentials Model ............................40 2.2.2 Mincer (1974): Accounting Identity Model ......................................... 44 2.2.3 Unveiling Higher Education and Labour Markets in Mincer (1958, 1974) ................................................................................................................48 2.3 T he M easurem ent of ROR........................................................................................55 2.3.1 Ability .................................................................................................... 56 2.3.2 Family Backgrounds ..............................................................................59 2.3.3 Quality of Schooling ..............................................................................61 2.3.4 Labour Markets ......................................................................................64 2.4 Co n c l u sio n s ................................................................................................ 68 4 CHAPTER 3 HUMAN CAPITAL THEORY AND MALAYSIA’S EDUCATION AND LABOUR MARKETS: REVIEW OF THE LITERATURE.......................................................................................................70 3.1 Setting the P oint of D epa r tu r e ........................................................................... 70 3.2 A pplied Studies o n M a l a y sia : A Critical R e v ie w ......................................71 3.3 Relevance of the H u m a n Capital T heory Q u e st io n e d ...........................81 3.3.1 Empirical Strategy of Gallup (1997) ...............................................................81 3.3.2 Addressing Education and Labour Markets? ................................................83 3.4 Co n c l u sio n s .....................................................................................................................88
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