Hong Kong’s Transition Toward a Knowledge Economy: Analyzing Effect of Overeducation on Wages Between 1991 and 2011

There is a need to transform Hong Kong’s economy from a service economy to a knowledge economy to address economic stratification and low economic upward mobility. This study used three samples of local employees for the years 1991, 2001, and 2011 to evaluate the effect of an economic environment marked by low private investment in scientific and technological innovation on the transformation of the economy and on opportunities for young adults to achieve economic upward mobility through education. The research goal was addressed by analyzing and comparing the effects of overeducation on wages in three different years. The results add a new perspective and demonstrate that Hong Kong essentially had a service-knowledge economy in those 3 years. They also indicate that although Hong Kong has made improvements in transforming knowledge into productivity between 1991 and 2011, it still has a long way to go to meet the requirements of a knowledge economy. The economic gap between occupations that are knowledge-intensive and those that are not has increased, and the economic situation of overeducated employees who fail to be employed in occupations appropriate for their education levels has worsened. The results have implications for local economic policymakers.