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Graduate unemployment is unemployment among people with an academic degree. Research  undertaken proved that the unemployment, and much more so, the underemployment of graduates, are devastating phenomena in the lives of graduates and a high incidence of either, are definite indicators of institutional ineffectiveness and inefficiency. Since the start of the economic recession in the US economy in 2007, increasing numbers of graduates have been unable to find permanent positions in their chosen field. Underemployment among graduates is high. Educated unemployment or underemployment is due to a mismatch between the aspirations of graduates and employment opportunities available to them. It was found that two factors are important regarding graduate unemployment or underemployment, namely incidence and duration. The duration of graduate unemployment in particular, appears to be a sharply declining function of age. It is principally a youth problem, most graduates find a job after some time, and once they have work experience in their chosen field, find subsequent job search efforts relatively easier. Given the effects of the current economic recession in the US, some graduates have gone more than a year since graduation without finding work in their chosen field, and have had to rely on odd jobs or work in the service industry, along with living with room-mates or moving back in with their parents to keep themselves current on their substantial student loan payments. High levels of long term graduate unemployment represent a massive threat to institutions of higher education within the US, which stand to lose a significant degree of social relevancy if the job market for graduates does not improve within the near future.
Graduate unemployment in China 
The markets for China's graduates share much in common with those of other countries. China's recent upsurge in graduate unemployment relates to a number of things. One important aspect is its education policy-making and economic development as well as reforms in the economy and in its higher education. Recently, the annual growth in the numbers of new graduates, estimated at four million for 2005, and in the rate of young unemployed graduates should logically bring about a withdrawal from higher education. Because with 8% annual growth, the Chinese labour market may well generate about eight million jobs, but these are mainly ones in manufacturing requiring low-level qualifications. This rising enrollment made employment an issue and a serious challenge for China.
Historical sketch 
Education policy-making 
- In 1922 China adopted the American model, and this dominated the Chinese higher education system until 1949.
- In 1952 all the higher education institutions, were brought under the jurisdiction of the communist government, and the Soviet model was adopted to restructure China’s higher education system, in order to serve the manpower needs for building a socialist China.
- In 1958 China made its first attempt to expand the higher education sector, in order to make possible an ambitious economic growth plan, the so-called Great Leap Forward for Socialist Construction.
- After 1978, with the end of the Cultural Revolution of 1966-76, China restored its higher education system and started educational reforms along with the move to a market-oriented socialist economy.
- In 1985 the central government announced its reform plan, and embarked upon a decentralization process which gave the local government and higher education institutions more autonomy.
- In 1993 the government launched further reform measures to increase accessibility to higher education, and a “user-pays” system was implemented along with fundamental changes in the job assignment system.
- From 1993 to 1998, higher education developed on the basis of numbers being controlled and limited, and quality being improved. The unduly low proportion of students in the tertiary sector brought out the negative impact on Chinese economic growth.
- In 1998, the Declaration of the World Conference on Higher Education organized by UNESCO in Paris made the Chinese government aware that a rapid increase in the enrolment figures in higher education would be a way to respond to the needs of opening up and the requirements of economic and social development.
- In 1999 the government decided to accelerate the pace of expansion, and enrolments in higher education institutions increased dramatically and continuously. Student numbers climbed from 7.23 million in 2000 to 9.31 million in 2001 and 11.46 million in 2002. The figure of 2004 was almost four times as many enrolments as in 1998.
Economic development 
Since 1978, the government has been reforming its economy from a Soviet-style centrally planned economy to a more market-oriented economy to increase productivity, living standards, and technological quality without exacerbating inflating, unemployment, and budget deficits.
China’s economy regained momentum in the early 1990s. The Asian Financial Crisis of 1998-99 influenced economy slowing down of growth fell as a consequence of which experts submitted proposals to state organs to stimulate economic recovery. This involved increasing student numbers and intensifying the com-modification of education as a way of stimulating internal consumption.
China’s higher education system prior to the 1999 expansion was not prepared for large-scale expansion. Moreover, before the 1999 expansion a national job market had not yet been established. With a focus on immediate economic growth, the policy makers appear to have made the 1999 expansion decision without a big picture of the future structure of China's market-oriented economy, and without knowing in which economic sectors manpower needs would increase.
Criticism of Graduate Unemployment 
The employment situation for new college graduates is different from the working population in general. The graduate unemployment crisis in China represents a wasteful investment of scarce resources. Large sums of money have consequently been invested in educating unemployed graduates which could otherwise have been invested in job-creating productive programmes. With a flood of new graduates, individuals are having a tough time finding jobs in an increasingly competitive labor market. Meanwhile, graduates have some negative expectations under the pressure of seeking jobs. Nanjing Normal University has surveyed students who expected to graduate in 2006 about "College Student's Attitudes about Job Seeking and Career". 44.21% prefer to get an employment contract first, then consider pursuing a new job position which is what they really desire to be employed for an average of 2 years. This phenomenon not only causes underemployment and high turnover in the job market, but also, graduates will have lower levels of job satisfaction, work commitment, job involvement and internal work motivation. Obviously, these series of problems will bring more risks for employers as well.
Responses to Criticism 
Graduate unemployment will be more likely to promote postgraduate school education. Half of graduates would like to consider attending postgraduate schools for enhancing their ability in seeking expert jobs. Government interventions designed to alleviate graduate unemployment by encouraging young job seekers to "Go west, go down to where motherland and people are in greatest need." The China Youth Daily has reported that some graduates have worked for years in villages of Hainan, China’s most southerly province. In 2003, the Communist Youth League has recruited over 50,000 graduates to provide volunteer service in education, health care, agriculture and cultural development in western provinces. As well as receiving a stipend, a State Council circular issued in 2005 promises the graduate volunteers preferential policies in civil service tests and graduate school entrance exams. Moreover, graduates have a great opportunity to be self-employed as the Chinese government has launched policies which are formulated to encourage college graduates to carve out their own. However, many college graduates remain underemployed or unemployed even after completing their advanced degree. It may very well be the case that technical college is a better long-term investment for high school graduates.
- First destination graduate employment as key performance indicator: outcomes assessment perspectives, Prof. Johan Bruwer, unit for institutional planning and research, Cape Technikon, South Africa, November 1998. Retrieved June 2006.
- Chinese National Bureau of Statistics
- Limin Bai, Graduate Unemployment:Dilemmas and Challenges in China's Move to Mass Higher Education, The China Quarterly,2006.
- Zheng Xiaochun, A Look Back on the Reform of Higher Education and Future Prospects, Research on Higher Education, 1998.
- World Bank, The Reform of Higher Education in China, China Financial & Economic, Beijing, 1998.
- Department of Planning and Development of the Chinese Ministry of Education, Statistical Report on Education in China, Beijing, February 2003.
- Fighting Poverty: Findings and Lessons from China’s Success (World Bank). Retrieved August 10, 2006.
- Zhang Linbin, Globalization and Its Effects on Youth Employment in China, Ministry of Labor and Social Security of People's Republic of China