SOAS Research Online

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 imderstand 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 carmot 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 coimtry, 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.