The devaluation of degrees in India

In post-liberalization India, rising demand for skilled labour and the privatization of higher education shifted the system from an elite to a massified stage. We ask whether this expansion reduced the value of degrees, and whether supply–demand adjustment alone explains the decline. Exploiting cohort exposure to the massification within an instrumental-variable framework, we estimate a 0.53 log point (41%) decline in wage premiums for graduates during massification. We find that while the human capital value of higher education – measured by average returns relative to non-graduates – is higher among historically deprived groups, the wage premium to graduating during massification deteriorates most sharply for these same populations. The erosion is strongest among women (58%), Scheduled Castes (65%), Scheduled Tribes (60%), Muslims (61%), rural residents (54%), and wage employees (53%). This pattern reveals a ‘double bind’ of higher education under massification: the groups that benefit most from education in principle experience the greatest decline in its labour market value in practice.